KARACHI: No sugar mill can export sugar unless it has cleared outstanding dues of farmers up to the last season and has started crushing at full capacity, the State Bank of Pakistan (SBP) said on Friday.
In the wake of surplus sugar production in the country, sugar mills have been seeking government permission to export the commodity while its prices on the local market are rising.
The government allowed the export of 200,000 tonnes of sugar for this season.
But the SBP came out with a number of conditions to make the exports possible. For instance, exporters now have to obtain a clearance certificate from the cane commissioner. They also have to obtain an export contract to carry out the procedure through banks.
Sugar prices continued to increase in March despite a surplus. A sugar expert said the recent increase in sugar prices was the outcome of the opening of the Afghan border.
The director of Foreign Exchange Operations Department (FEOD) will allocate sugar export quota to sugar mills on a first-come, first-served basis, circular issued by the SBP said on Friday.
Authorised dealers, i.e. banks, will ensure receipt of a minimum 15 per cent of total contract value as advance payment or obtain an irrevocable letter of credit from the buyer.
“All exports including those destined for Afghanistan and Central Asian Republics will also be subject to receipt of export proceeds by wire transfer through banking channel,” the SBP said.
Exporters must ship the sugar within 60 days from the date of FEOD’s approval regarding quota allocation or by May 31, whichever comes earlier, it said.
The State Bank made it clear that there will be no export subsidy or cash support for the exports. In case of non-performance within the stipulated time against the quota allocated by FEOD, authorised dealers will recover a penalty of 15pc of total contract value from the exporter and deposit the same with the FEOD.
The government has extended the deadline for the shipment against sugar export quota up to April 30. Accordingly, it has been advised that all exporters must ship the sugar within 45 days from the date of SBP approval regarding quota allocation or by April 30, whichever comes earlier.
In December, the Economic Coordination Committee (ECC) of the Cabinet allowed export of 225,000 tonnes of sugar until March 31 with the condition that a commerce minister-led inter-ministerial committee, constituted by the Prime Minister’s Office in November 2015, will monitor sugar prices and recommend the ECC to stop further export in case of a negative impact on domestic sugar prices.
Published in Dawn, April 8th, 2017
