State Bank of Pakistan (SBP) has made it categorically clear that no sugar mill would be allowed to export sugar until it has cleared outstanding dues of farmers up to the last season and has started crushing at full capacity.
Due to surplus sugar production in the country, sugar mills have been trying to rally the government for granting them the permission to export the commodity while its prices in the domestic market are rising.
The government had recently approved the export of 200,000 tonnes of sugar for this season.
The central bank has set some stipulations in order to make the exports possible. For example, now exporters are required to obtain a clearance certificate from the cane commissioner. Moreover, they must obtain an export contract to carry out the procedure through banks.
The sugar prices have been rising despite the commodity being in surplus. The recent rise in sugar prices has been heralded to the opening of the Afghan border according to an expert.
The director of Foreign Exchange Operations Department (FEOD) will assign sugar export quota to sugar mills on a first come, first-served basis, circular issued by the SBP said on Friday.
The authorised dealers, i.e. banks, will check receipt of a minimum 15 pc of the total contract value as advance payment or obtain an irrevocable letter of credit from the buyer.
And exports heading to Afghanistan and Central Asian Republics will also be subject to receipt of export proceeds via wire transfer through banking channels, the SBP said.
The sugar must be exported within 60 days by the exporter from the date of FEOD’s approval regarding quota allocation or by May 31, whichever comes earlier, it said.
No export subsidy or cash support will be provided for the exports as per the SBP. In case of non-performance within the stipulated time against the quota allocated by FEOD, authorised dealers will recover a penalty of 15pc of total contract value from the exporter and deposit the same with the FEOD.
The government has also extended the cut-off date for the shipment against sugar export quota till April 30. It has been strongly advocated that all exporters must ship the sugar within 45 days from the date of SBP approval regarding quota allocation or by April 30, whichever comes earlier.
