ISLAMABAD: The country’s sugar industry has not yet been able to export any amount of sugar out of 250,000 tons allowed by the government, Business Recorder has learnt.
According to the Pakistan Sugar Mills Association (PSMA), the industry is still finalizing the modalities set by the State Bank of Pakistan (SBP), the Ministry of Industries, the Ministry of Commerce, and other relevant quarters. Thrice the decision was reconsidered by the Economic Coordination Committee (ECC) of the Cabinet back and forth.
Now that a final decision came with approved again by the cabinet, the Commerce Ministry and now the SBP also issued its notification. Now sugar will either be exported through LC or by inward TT by cash of full amount. Then SBP will issue quotas when mills apply again with full documents. After the SBP issues quotas, the export of sugar will be started. As yet, the industry is busy in fulfilling the requirements of the government, the PSMA officials said.
SBP issues mechanism for quota-based sugar export
The sugar industry has urged the government to allow the export of the commodity of up to one million tons as the country has more than the locally required stocks of sugar. Global refined sugar prices which in December 2022 when the PSMA was making efforts to get permission for the exports were hovering around $530-534 per ton which on February 2023 have reached $566.65 per ton. If the industry managed to export at the current rates, it will earn at least $141.66 million by exporting 250,000 tons of the commodity.
The sugar industry is asking the government to allow the export of one million tons of refined sugar which will bring over $1.25 billion much-needed foreign exchange for Pakistan. The PSMA is of the view that sugar export permission will not only help earn critical foreign exchange for the country but will also enable the industry to pay the dues of farmers.
The ECC of the Cabinet has allowed the export of sugar as per the following terms and conditions: The maximum limit for the realisation of export proceeds shall be within 60 days of opening of LC for export of sugar. Quota for export of sugar shall be distributed among provinces in the following manner: (i) Punjab 61 percent on first come, first serve basis; (ii) Sindh 32 percent through the cane commissioner of the province; and (iii) Khyber-Pakhtunkhwa (KPK) seven percent on first come, first serve basis. However, according to officials some of the members of PSMA Punjab are also asking for the implementation of Sindh like model for the fixation of quota in Punjab.
According to the Commerce Ministry, the SBP will update the ECC on the export of sugar on a fortnightly basis, whereas, the PSMA will undertake that the price of sugar will not increase in the domestic market from Rs85-90/kg (ex-mill) for 2021-22 stocks.
Copyright Business Recorder, 2023