June 02, 2007	Saturday	Jamadi-ul-Awwal 16, 1428

ISLAMABAD, June 1: The Pakistan Vanaspati Manufacturers’ Association (PVMA) has strongly opposed the proposal of the Pakistan Edible Oil Refiners Association, seeking reduction of customs duty by Rs1,000 per ton on import of crude palm oil.

Deputy secretary of the PVMA, Mohammad Iqbal, said in a statement that the association had already submitted their viewpoint at the public hearing by the National Tariff Commission (NTC) held on May 30 last on the proposal of Pakistan Edible Oil Refiners Association.

The association said on the basis of FOB/C&F prices of crude palm oil, RBD palm olein and RBD palm oil, the landed price of crude palm oil has been worked out to be Rs72,052 per ton and RBD palm olein and palm oil at Rs75,109 and Rs76,807 per ton, respectively.

Hence the importers of crude palm oil are enjoying an advantage of Rs3,057 per ton over the palm olein importers and Rs4,755 per ton over the RBD palm oil importers, leaving no justification at all for further reduction of customs duty on import of crude palm oil.

RBD palm oil has a melting point of 37(+) or (-) 2 and is convertible to vegetable ghee even without further processing. As a result, the cottage type units are engaged in direct filling of RBD palm oil, creating a serious health hazard for general public.

In the budget 2001-2002, customs duty on RBD palm olein was reduced to discourage import of RBD palm oil to avoid direct its filling.

The association claimed that import of crude palm oil does not generate jobs as most of refineries are fully automated requiring not more than 10 to 15 person per refinery.

Most of the crude palm oil refineries have an in-built capacity for manufacture of vegetable ghee. Due to cheaper availability of palm oil, they will take over the entire market.

On the other hand, the PVMA member units employ about 250,000 persons directly or indirectly and hence it would be unwise to sacrifice such a large number of workforce to benefit a small number of crude palm oil refineries, the association said.

Presently there are about 100 vegetable ghee/cooking oil units which are members of the PVMA.

Assuming average investment of Rs100 million per vegetable ghee/cooking oil unit, a total investment of Rs10 billion has been made in this industry. Hence PVMA feels that the government, while encouraging crude palm oil refineries, will not ignore the existing investment in the vegetable ghee / cooking oil industry.

The crude palm oil refineries, while crystallising and fractionalising RBD palm oil would recover about 75 per cent RBD palm olein and shed 25 per cent RBD palm stearin, meaning that crude palm oil refineries with an overall capacity of 1 million tons would shed 250,000 tons of RBD palm stearin which is much in excess of country’s requirements.

According to the association, palm stearin has a very high melting point used in the manufacture of toilet soap and other chemicals.

The government, while considering its health hazard problem, had earlier made it mandatory that the blue colour would be added before consignments of palm stearin are cleared by the Customs Authorities for use in toilet soap.

It, however, pointed out the colour is easily bleached and in that case imported palm stearin is being blended with crude palm oil and the RBD palm oil used for manufacture of vegetable ghee by the un-organised sector units.