KARACHI, Dec 2: The Pakistan Export Finance Guarantee Agency (PEFG), even after collecting premium amount from exporters, is not providing post-shipment insurance cover to the export business which was causing financial losses to exporters for no fault of their own.

Talking to Dawn, a number of exporters’ bodies confirmed that their members were suffering at the hands of the PEFG, which even after receiving premium amount for the post-shipment insurance cover, did not honour its commitment in case foreign buyers default.

Pakistan Bedwear Exporters Association (PBEA) chairman Shabir Ahmed said that a number of exporters had made complaints against the PEFG for not honouring its commitment that left exporters exposed to huge financial losses and erosion of their reputation and long standing in the market.

He said the government established the PEFG to facilitate and provide post-shipment cover to the export trade at a reasonable cost, but the agency is more interested in collecting premium money rather than providing security or cover to the export trade in case of default by foreign buyers.

In reply to a question, Mr Ahmed said that he could give a number of examples where the PEFG did not honour its commitment.

As a result of this “unethical practice”, he said, exporters were left at the mercy of discounting banks which did not only enter into litigation, but also put their names on the State Bank’s Credit Information Bureau.

Mr Ahmed said further that it was witnessed that the discounting banks (banks that purchase documents of invoice value) instead of approaching the PEFG, which had given insurance protection and also received premium money, asked exporters to “face the music”.

The PBEA chief said that if an exporter had to provide premium for getting a post-shipment insurance cover he could do it directly and would never involve the PEFG for that matter if it had not to take the liability in case a foreign buyer defaulted even after approving the shipment quality and quantity wise.

The Export Promotion Bureau also promotes the PEFG on its website by asking exporters to take post-shipment insurance cover from the agency. It also states that banks will also issue loans by using the insurance policy as collateral, he adds.

An institution like PEFG, which was sponsored by the Asian Development Bank and leading banks of the country, had failed to provide a “healthy business service” to exporters, Mr Ahmed added.

“I must say that it is a scam and the government should immediately hold an investigation against it, as it is causing heavy losses to the exchequer,” he asserted.