KARACHI: The State Bank of Pakistan (SBP) has asked sugar mills to clear dues of cane growers and begin crushing from November to become eligible for exporting the commodity.

Endorsing government’s decision to allow sugar exports, the central bank on Tuesday attached a number of conditions on exporters and advised banks to ensure full compliance. The Ministry of Commerce has allowed sugar exports of one million tonnes.

Sugar millers have repeatedly pleaded with the government to allow exports of surplus commodity. They warned that due to surplus stocks, mill owners may not be able to purchase sugarcane for the coming season.

The decision comes at a time when the government is struggling to pay for debt servicing costs, filling the widening trade gap and increase its foreign exchange reserves.

The central bank has mandated upon all mill owners to submit required documents before allowing exports. The SBP directed the banks that

the owners are required to submit clearance certificate issued by the concerned Cane Com­missioner to the effect that the mill has cleared outstanding dues of the farmers for sugarcane crop up to 2017-18.

“After November 15 the said clearance certificate will also certify that concerned sugar mill has started crushing at full capacity,” said the SBP. In case export quota is granted prior to Nov 15, sugar mill will provide an undertaking that it will commence crushing from the said date, said the SBP.

Confirmation is also required from respective authorised dealers that the said sugar mill is not a defaulter of any bank in Pakistan. “There will be no freight or financial support by the federal or provincial governments for export under the above scheme,” said the SBP.

The SBP made it clear that sugar mills who are defaulters of banks will not be allowed to export sugar. “Authorised dealers will ensure receipt of a minimum 15 per cent of total contract value as advance payment or obtain an irrevocable L/C from the buyer,” said the SBP.

There will be no provision of surrendering the quota once allocated and in case of non-performance within the stipulated time against the quota allocated, authorised dealers will charge a penalty of 15 per cent of total contract value from the exporter and deposit in favor of government of Pakistan.

“All exports including those destined for Afghanistan and Central Asian Republics will be subject to receipt of export proceeds by wire transfer through banking channel,” said the SBP.

Exporters must ship the sugar within 60 days from the date of approval regarding quota allocation. Both date of approval and date of shipment are included in counting of the 60 days period, said SBP.

Published in Dawn, October 31st, 2018