Maputo — The Mozambican vegetable oil company Fasol intends to triple its production by August 2004, according to the chairman of its board of directors, Jamu Hassan.

Currently, Fasol has the capacity to produce a million litres of oil a month. Cited in Friday's issue of the daily paper "Noticias", Hassan said the company plans to invest in a refinery, with the capacity to process 150 tonnes a day, plus a new packaging line.

This investment, costing 1.4 million US dollars, will allow Fasol to produce 3.5 million litres of oil a month, and to improve the quality of its product.

Hassan said this will allow Fasol to compete with foreign producers. Currently the vegetable oil market in Mozambique is swamped with South African oil, much of which is smuggled into the country - but with the lowering of tariffs under the SADC (Southern African Development Community) trade protocol, this oil will, sooner or later, be able to enter the country legally and duty free.

Hassan said that economies of scale are fundamental in the vegetable oil industry, and no Mozambican producers will be able to compete unless they produce at least 1.4 million litres of oil a month. Only above this threshold does the unit cost become low enough to place the oil on the market at competitive prices.

Hassan added that the vegetable oil industry has just four years to make the technological adaptations necessary to face foreign competition. It could not eternally blame its lack of profitability on illegal imports and lack of state protection.

Fasol hopes that, with its new investment, it will be able, not only to supply the entire market in southern and central Mozambique, but also export to Zimbabwe, Malawi and South Africa.

He said the new refinery would produce the Fasol brands, and will also be licensed to produce South African and Portuguese brands of oil.