The federal government has linked the export of sugar with clearance of outstanding dues of the farmers up to the last season and starting of crushing. The State Bank of Pakistan (SBP) Monday asked the Authorized Dealers (ADs) to process the export of sugar cases in accordance with Ministry of Commerce's Office Memorandum No 7(2)/2012-E.III dated December 14, 2015, in terms of which the government has allowed sugar mills to export 500,000 tons sugar as per the terms and conditions prescribed by the government.
Recently, the Economic Co-ordination Committee (ECC) of the Cabinet allowed 500,000 tons sugar in a phased manner, ie, some 200,000 tons by December 31, 2015 and 350,000 tons (cumulative) by Jan 31, 2016. The remaining quantity (150,000 tons) by March 31, 2016, completing the quantity of 500,000 tons of sugar. Following the decision of the federal government, the SBP announced a detailed mechanism to start sugar export. As per the mechanism, ADs will forward the requests of sugar mills through their respective departmental/business/group heads to the director, Exchange Policy Department, State Bank of Pakistan, Karachi for approval.
A clearance certificate, issued by the concerned cane commissioner to the effect that the concerned sugar mill has cleared outstanding dues of farmers up to the last season and has started crushing on full scale, would be necessary along with formal request of sugar export. In addition, attested/authenticated copies of sugar export contract, Manual Form-E or printout of EFE request in case of electronically generated Form-E through WeBOC and irrevocable Letter of Credit or advance payment voucher, swift message and reporting schedule/credit advice is required to be submitted with the request.
According to circular PD Circular Letter No 20 of 2015, the SBP will allocate sugar export quota to sugar mills on first come first served basis. The ADs will ensure receipt of a minimum 15 percent of the total contract value as advance payment (evidenced by advance payment voucher, swift message and reporting schedule/credit advice) or obtain an irrevocable L/C from the buyer.
All exports including those destined for Afghanistan and Central Asian Republics by land route will be subject to receipt of export proceeds by wire transfer through banking channel. Similarly, a exporter will be required to must ship sugar within 45 days from the date of SBP approval or by March 31, 2016, whichever comes earlier. The ADs will ensure forfeiture of 15 percent advance payment in favour of government in case of non-performance within the stipulated time. As per the mechanism, ADs will submit sugar export shipment update to the Director, Exchange Policy Department, State Bank of Pakistan, Karachi on a weekly basis. Incomplete requests shall not be considered. The SBP has directed ADs to bring the same to the notice of all their constituents.
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