Maputo — The Mozambican vegetable oil industry is on the verge of collapse, according to Feliciano Muchine, general secretary of the Association of Oil Producers (AIOPA), cited in Thursday's issue of the daily paper "Noticias".

Muchine said the current crisis is caused by massive smuggling of cooking oil from neighbouring countries, plus a shortage of raw material, and the obsolescence of the machinery in the Mozambican factories.

"We have no doubt that illegal imports have taken over a significant part of the domestic cooking oil market, causing losses to the national industry", said Muchine.

He thought that 50 per cent of all vegetable oil sold in Mozambique is contraband. He put total annual demand for vegetable oil at "between 20,000 and 30,000 tonnes".

As a result, the Mozambican factories are working at less than 25 per cent of capacity, and are at serious risk of bankruptcy. He pointed out that this would throw more than 1,500 workers out of their jobs.

Muchine wanted the customs service to clamp down on illegal oil imports, and the government to ease the tax burden on the domestic industry.

He added that the oil companies find it extremely difficult to acquire bank loans - and if any loans are granted, they are at punitive interest rates.