KARACHI: The Sate Bank of Pakistan on Tuesday allowed domestic mills to export 500,000 MTs of the sugar without any quota restriction. Following the decision of the Economic Co-ordination Committee (ECC) of the Cabinet, the SBP also announced that contracts made in pursuance of the ECC decision of January and May this year against which sugar had not yet been exported or partially exported be immediately cancelled.
Moreover, contracts made in pursuance of the ECC decision of October this year would be cancelled if sugar was not exported within 15 days of the decision. However, sugar mills can now export up to 500,000 tons of sugar against irrevocable Letters of Credit (L/Cs) or contracts with 10 percent advance payments to be shipped in 90 days of the registration with the SBP, in addition to the already allowed export limit of 700,000 tons of sugar.
The central bank, through EPD Circular Letter No11 /EPP.1 (51)-Sugar 2012 issued on December 18 this year, advised authorised dealers (banks) that approval of the hal a million tons of sugar export "will be subject to receipt of a minimum 10 percent of total contract value as advance payment (evidencing by advance payment voucher, swift message and reporting schedule/credit advice) and exporter must ship the sugar within 90 days from the date of SBP approval or obtaining an irrevocable L/C of 90-day maturity from the buyer".
Banks will forward requests of sugar mills with attested photocopies of contract, E-Form, irrevocable L/C or advance payment vouchers, swift message and reporting schedule /credit advice, as the case may be, for SBP approval, the circular said. SBP will allow export permission against each E-Form on first-come, first-served basis and incomplete requests will not be considered. However, banks will be required to send sugar export updates to the Director of the Exchange Policy Department of the State Bank on daily basis. SBP also announced that all approvals granted under FE Circular Letter No3 & 5 dated March 5, & June 14 this year, respectively, had been cancelled with immediate effect.
In addition, all approvals granted under FE Circular Letter No8 dated October 19 this year "will remain valid for shipment up to December 26, 2012 and stand cancelled thereafter". Requests for approvals against earlier issued circulars would be subject to receiving of a minimum 10 percent of total contract value as advance payments and shipped within 60 days from the date of the SBP approval or obtaining an irrevocable L/Cs of 60-day maturity from buyers and shipped within 60 days from the date of the SBP approval.