Why does my oil cake drop in the centre My cake initially rises perfectly, but after about 20 - 25 minutes, the cake starts to slightly droop with the cake also pulling away from the side of the pan.

I don't mind that too much, as the initial rising seemed to be a bit exaggerated anyway.  But once I remove the cake from the oven, it droops further - in fact, it collapses.

I take great care preparing the batter by sifting dry ingredients, and using eggs at room temperature.  

The procedure I used to prepare the cake batter is:


I first cream egg yolks and sugar for about 1 minute 
Then I add flour/baking powder mixture, oil, water, beat again for about 1 minute 
Then beat and fold in the egg whites.


Any ideas what I might be doing wrong?
There are couple of reasons that causes a cake to collapse. One reason could be flour/baking powder ratio. As far as I understand from your description this applies to your case. Because the procedure that you follow is fine.

I suggest to use this ratio:


1 cup plain flour  
1 teaspoon baking powder


If it does not work then try to use less baking powder.