KARACHI: The State Bank of Pakistan (SBP) has directed banks to ensure that 100 percent of sugar export proceeds to Afghanistan are received in advance through official banking channels.
This measure aims to enhance transparency and safeguard the timely collection of export payments, particularly in trade with Afghanistan.
The Economic Coordination Committee (ECC) of the Cabinet has allowed export of further 100,000 MT of sugar with certain terms and conditions. The ECC’s decision has also been ratified by the Federal Cabinet and accordingly, Ministry of Industries and Production has issued Memorandum (O.M) F No 1(6)/2022-23-CAO dated September 25, 2024 for the export of sugar.
ECC grants conditional approval to sugar export to Tajikistan
In July, the federal government granted permission to the mills for the export of 150,000 metric tons of sugar. However, on the request of the sugar mills, the government has allowed further export of sugar to offload sugar stocks before the new crushing season.
The SBP on Tuesday advised banks to process the requests of eligible applicants for “Export of Further 100,000 MT of Sugar,” subject to submission and fulfillment of the certain conditions.
Authorized Dealers (Banks) will obtain proof of allocation of quota by the respective Provincial Cane Commissioner to process the sugar export request and keep a copy of the same in their record. ADs will also obtain an undertaking from the exporters that consignment would be shipped within 60 days of allocation of quota by respective Cane Commissioner.
Previously, exporters were required to secure 100 percent of export proceeds in advance from foreign buyers through standard banking channels before shipment. However, as per fresh directives for exports to Afghanistan, banks are now specifically tasked with ensuring the receipt of these proceeds in advance through official banking channels. For other destinations, sugar exports can be processed using a Letter of Credit (sight), providing more flexibility in payment arrangements.
The banks will submit sugar export transactions and shipment updates to the Director, FEOD, SBP-BSC on weekly basis as per the prescribed reporting format by every Friday.
As per Ministry of Industries and Production Memorandum, Pakistan Sugar Mills Association (PSMA) provides an undertaking that ex-mill prices will not increase beyond Rs 140 per kg and the ex-mill price as well as market price of sugar shall be monitored by the Provincial Authorities.
The benchmark sugar retail price per kilogram will be taken from SPI as on 13-06-2024 with the additional margin of Rs.2.00 per kilogram. It will be the duty of the Sugar Advisory Board to monitor sugar prices regularly, at least on a weekly basis. In case the retail price of sugar rises beyond the benchmark price plus Rs 2.00 per kilogram then the Sugar Advisory Board will immediately revoke permission to export.
The entire export proceeds through sugar mills would be utilized for clearing payments to the farmers/growers.
In case of any violation of terms and conditions, the export of sugar will be immediately stopped. However, the condition of revoking of export quota in case of non-payment of dues of growers from the proceeds of export of sugar will be applicable only to the non-compliant mills rather than PSMA as a whole.
Copyright Business Recorder, 2024