SBP announces sugar export mechanism
While announcing the sugar export mechanism, the State Bank of Pakistan (SBP) has made it mandatory for the sugar mills to bring the sugar export proceeds into Pakistan within 60 days of the opening of Letter of Credit (LC).
Following the directives of the federal government, the State Bank has advised the banks to process the export of sugar cases as per the allowed quota allocation. Ministry of Commerce Office Memorandum (O.M.) No. 7(2)/2012-Exp-III dated January 18, 2023 regarding has allowed sugar mills to export 250,000 MT (Two Hundred Fifty Thousand Metric Ton) sugar. Accordingly, the SBP has advised the banks to process the export of sugar quota allocation cases, as per state bank mechanism.
SBP has directed that the Authorized Dealers (banks) will ensure to obtain an irrevocable LC from the buyer and the export proceeds will be realized within 60 days of opening of LC. While calculating a period of 60 days, both days of LC opening and realization will be included, the SBP said in a circular issued to the bank.
In addition, there will be no subsidy by the Federal or Provincial Governments for export of sugar under this scheme. ADs will forward the requests of sugar mills through their respective Group Heads to the Director, Foreign Exchange Operations Department (FEOD), SBP-Banking
Services Corporation (BSC), Head Office, Karachi for approval. Sugar export contract and clearance certificate issued by the concerned Cane Commissioner will be required to the effect that the concerned sugar mill has cleared outstanding dues of the farmers for sugarcane crop up to 2021-22.
In addition, print out of electronically generated Financial Instruments for export through Pakistan Single Window (PSW) will also be necessary for the submission of cases. SBP has made it clear that incomplete requests will not be considered.
FEOD will allocate sugar export quota to the sugar mills on a first come first served basis, based on the date/ time of the case received through SBP Regulatory Approval System. The export by the sugar mill will strictly be made through the AD that has submitted the request for quota allocation. The AD will ensure that export by a sugar mill does not exceed the quota allocated to it and there will be no provision of surrendering, transferring and amending the quota once allocated by FEOD. The quota for sugar export for the province of Sindh will be allocated by Cane Commissioner of the province.
As per terms and conditions, ADs will submit sugar export shipment updates, including shipments made out of quota for Sindh, to the Director, FEOD, SBP-BSC.
It may be mentioned here that recently, the ECC of the Cabinet has allowed export of 250,000 metric tons of sugar, inclusive of the previously approved quantity of 100,000 metric tons.