LAHORE, June 4: The All Pakistan Solvent Extractors Association (APSEA) has rejected a proposal to impose 15 per cent GST on imported oilseeds and locally produced edible oil as well as to slash the duty on the imported oils, claiming that it will result in the closure of the solvent extraction industry and loss of jobs.

In a letter addressed to federal industries secretary Dr Akram Shaikh, the APSEA said the proposal, if implemented, would result in a loss of revenues to the government besides spelling a disaster for the local oilseed producers.

It said the consequences of the acceptance of the proposal for the poultry farmers would not be much different as there would be no supply of vegetable meals (because of the expected closure of the solvent extractor units).

The letter has been sent to the secretary after a meeting held on May 31 at the ministry on edible oils tariff rationalization.

The APSEA has also expressed its objections to the “manner and circumstances” in which the meeting was held.

The letter reminded the secretary that the current edible oils and oilseeds “policy was formulated by him last year” and was deemed to be fair to all parties. It also said even at an earlier meeting held on April 9, he had stated that all the “stakeholders had a level playing field.”

Commenting on the secretary’s assertions at the very outset of the May 31 meeting that the first of all it had to be determined whether a level-playing field exists between all the stakeholders, it says: “We are at a loss to understand what happened in the intervening days which has changed your thinking.”

The solvent extractors have urged the secretary to “re-examine the issues before taking final decision.” They added the CBR was well aware of the inequity of levy of GST as proposed and of the practical difficulties that it would involve.

“Moreover, no change in the tariff structure on edible oils or oilseeds should be made without fully considering the country’s long-term objectives and the purpose for which these protective tariffs were imposed in the first place,” the letter concludes.

In a separate letter addressed to the finance minister Shaukat Aziz, the APSEA urged him to intervene in the matter.

Meanwhile, talking to Dawn APSEA member Mian Samiuddin claimed that the importers lobby, including a multinational company operating in the country, was trying to get a rebate of Rs9,800 per ton on imported oils for exporting them to Afghanistan via land route. He said the importers had also offered the government to pay an additional GST of five per cent on their imports. He feared that the imported oil would be exported to Afghanistan only on papers and would be sold within the country, ruining the local solvent extraction industry. He said export of imported oils to Afghanistan was allowed after processing via the sea route through Iran.

APSEA chairman Shahzad Ali Khan said the combined turnover of 37 solvent extractor out of a total 62 (the rest of already lying closed) stood at Rs24 billion. He said the net investment in the sector stood at Rs5 billion and the industry was meeting the domestic requirement of 650,000 tons of edible oil. Furthermore, he said, the industry was also meeting the needs of meals for the poultry industry.