LAHORE, Jan 24: Solvent extractors have warned that they will close down their plants from Feb 10, if the government fails to stop import of duty/tax free palm oil under the Duty and Tax Remission on Export (DTRE) rules.

"The oil is being imported from Malaysia (under the DTRE rules without paying duty and sales tax on it) ostensibly for export to Afghanistan. But it never crosses the border and is being sold in the local market, causing price distortion for solvent extractors and ghee producers," All Pakistan Solvent Extractors Association senior vice-chairman Haroon Rashid told a news conference here on Saturday.

He provided names of 13 importers who have imported 60,285 ton palm oil under the DTRE rules in last couple of months for export to Afghanistan, whose total consumption is said to be about 30,000 tons. Most importers belong to the NWFP.

"This has resulted in a tax revenue loss of Rs1.200 billion to the government," Mr Rashid said. "All stakeholders involved, that is, the government, solvent extractors, ghee producers as well as oil seed growers, are going to suffer enormously if this practice is not checked," he warned.

"The closure of 67 solvent plants around the country will make soft edible oil unavailable in the local market. It will also leave an adverse impact on local poultry feed production, which heavily depends on the solvent extractors for canola and sunflower meals.

Moreover, it would become difficult, rather impossible, for us to lift the local oil seed crop at the current support price (set by the industry itself) of Rs675 per maund and even more. This would cause a serious setback to the efforts to increase local oil seed production," he said.

He said the APSEA had already informed the federal agriculture secretary of the threat posed by duty and tax free import of palm oil. "We are contacting the ministers concerned and if our demand is not accepted, we would be left with no option but to shut down our plants because we cannot afford to lose continuously," he concluded.