Duty cut on palm oil to benefit a select few

KARACHI: Edible oil manufacturers have expressed dissatisfaction over the recently announced cut of Rs1,000 in duty on crude palm oil imports.

“The reduction will only help six refineries and its effects will not trickle down to the consumers unless duties on other types of raw material for edible oil are also lowered,” said Khawaja Arif, Chairman of the Pakistan Vanaspati Manufacturers Association (PVMA).

The government had slashed the duty from Rs9,000 to Rs8,000 per ton on the import of crude palm oil in the budget, claiming that ghee and edible oil prices would consequently be reduced.

Some went so far as to say that ghee and edible oil prices would fall by up to Rs10 a kg as a result of the duty cut, a claim that ghee and oil manufacturers are not supporting.

“The duty reduction will lead to a price fall of Re1 per kg,” said Arif. “It is surprising that the government claims it is providing relief to the consumers with this duty cut.”

Sohail Bhatti, a palm oil importer and General Manager Cargill Pakistan Holdings (Pvt) Ltd, agreed. He said the government’s claim of providing relief in oil and ghee prices was untrue as it would cause a price reduction of only Re1 per kg. “How will this provide relief to the consumers?” he asked.

Captain Tariq Subhan, Managing Director AB Oil Industries, said “the duty cut will not benefit the consumers, on the contrary the increase in general sales tax from 16 to 17 per cent will push up oil and ghee prices.”

According to Subhan, the duty cut will only provide relief for five or six oil refineries while 90 oil and ghee manufacturers will remain unaffected.

Arif said crude palm oil is only one of the many raw material that Pakistan imports. He said that the PVMA was trying to meet Federal Board of Revenue (FBR) officials to ask them to reduce the duty on the other two raw material – refined, bleached and deodorised (RBD) palm olein and RBD palm oil.

According to the PVMA chairman, some of the local refineries which will benefit from the duty reduction include Mapak Edible Oils, Khadija Edible Oil Refinery and Yaqoot Oil Processing & Extracting Mills. Besides, some ghee refineries would also benefit which are part of the PVMA, he said.

The association wanted a fair decision that could provide a level-playing field to all importers and manufacturers of edible oil in the country.

Published in the Express Tribune, June 11^th, 2010.