Failure to export sugar on time: SBP tells banks to slap penalty of 15 percent of contract value

The State Bank of Pakistan (SBP) has asked banks to impose a penalty of 15 percent of total contract value on sugar exporters, in case they fail to export sugar within the stipulated time period against the quota allocated. According to a circular, the SBP has advised Authorized Dealers (ADs) to process the cases of eligible sugar mills for cash freight support against the export of sugar as Finance Department, Government of the Punjab has released funds for freight support on export of sugar.
However, the SBP has reiterated that in case of non-performance within the stipulated period against the quota allocated by Foreign Exchange Operational Department (FEOD) of SBP, ADs will recover a penalty of 15 percent of total contract value from the exporter and deposit through Demand Draft or Pay Order in favor of government of Pakistan.
In case of partial shipment, the penalty will be recovered by the AD proportionately. Further, sugar mills/exporters who are defaulters of banks will not be allowed to export sugar/paid freight support. As per procedure, the SBP will disburse freight support payments to sugar mills in Punjab Province at variable rates to be calculated on daily basis as per the formula based on white sugar price index published by International Sugar Organization.
Further, the international sugar price on the date of sugar export quota allocation will be applicable for calculation of rate of freight support irrespective of the export price. ADs have been asked to forward the shipment-wise requests of sugar mills through their respective Department to SBP-BSC for claiming freight support along with the authenticated copies of approval letter for allocation of sugar export quota, Form-E, Goods Declaration Form (GDF), Bill of Lading/Truck Receipt/ Railway Receipt, etc.
Freight support will be paid to sugar mills on first-come-first-served basis. Freight support will be allowed only after full realization of export proceeds against E-Form. Exporters will be required to ship the sugar within 60 days from the date approval regarding quota allocation to be eligible for freight support. Both date of approval and date of shipment are included in counting of the 60 days period.
For shipment by sea, the date of shipment is the "Shipped on Board" date on Bill of Lading. For shipment by land route, the "Out of Charge" date will be considered as the date of shipment. Sugar mills will approach the respective office of SBP-BSC through their ADs claiming the freight support within 60 days from realization of export proceeds or date of shipment, whichever comes later.
Further, both dates of submission of claim and realization of export proceeds or date of shipment, whichever applicable, will be considered in calculating number of days. No claims will be entertained after aforementioned time period.
The SBP-BSC will return discrepant claim to the respective AD and the same must be resubmitted after removing the discrepancies within 30 days from the date of SBP-BSC's letter (both dates inclusive), after which no such application will be entertained.
Only such sugar mills having presence in Punjab and submitting certificate from the office of Cane Commissioner Punjab at the time of allocation of sugar export quota will be eligible for sugar freight support. Approved claim will be disbursed to the respective AD in its account maintained with the SBP-BSC for onward credit to the exporter's account within 24 hours of disbursement.