Sugar export: 100pc receipt of export proceeds in advance made mandatory

KARACHI: The State Bank of Pakistan (SBP) has linked the export of sugar with 100 percent receipt of export proceeds in advance through a banking channel. Recently, the Economic Coordination Committee (ECC) of the Cabinet, in its meeting held on July 13, 2024, has allowed export of 150,000 MT of sugar with certain terms and conditions.

The Ministry of Industries and Production has also issued Office Memorandum (O.M) F. No.1(6)/2022-23-CAO on June 26, 2024 for the export of sugar.

Accordingly, the State Bank of Pakistan (SBP) has advised to process the requests of eligible applicants for “Export of Sugar”, subject to submission and fulfillment of the requirement notified by the SBP.

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As per the SBP’s guidelines, banks will ensure 100 percent receipt of export proceeds in advance from the buyer abroad through the normal banking channel, before the shipment takes place, based on a valid sales contract.

In addition, authorized Dealers (ADs) will obtain proof of allocation of quota by the respective Provincial Cane Commissioner 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 45 days from the date of quota allocation.

ADs will be required to submit sugar export transactions and shipment updates to the Director, FEOD, SBP-BSC, Head Office, Karachi on weekly basis as per the reporting format by every Friday.

The SBP has also advised banks to bring these instructions to the knowledge of all their constituents and ensure meticulous compliance there against.

As per Ministry of Industries and Production OM, 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 shall be the duty of the Sugar Advisory Board to monitor sugar prices regularly, at least on a weekly basis.

Moreover, retail prices will also be monitored by the concerned Provincial Governments and the Ministry of Industries and Production shall inform them to perform this monitoring.

If 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. Provinces will monitor the clearance of payments and report to the Board. In case of violation of any of the terms stated above, the export of sugar would immediately be stopped.

The Ministry of Industries and Production will ensure that quota for export of sugar shall be distributed amongst provinces as per current year’s actual production.

Copyright Business Recorder, 2024