ECC amends conditions for the export of sugar

Approves three major changes for export of 250,000 metric tonnes

Shahbaz Rana January 27, 2023


Almost a month and a half after its decision to open exports, the government on Thursday changed the terms for the export of 250,000 metric tonnes of sugar, indicating that inefficient decision-making has been taking a heavy toll on every sphere of economic life.

The Economic Coordination Committee (ECC) of the cabinet approved making three major changes in its December 15th decision amid a spike in the price of the commodity in the local market.

An official handout from the Ministry of Finance stated that the Ministry of Commerce submitted a summary regarding the export of sugar with proposals from the State Bank of Pakistan (SBP) and the Pakistan Sugar Mills Association (PSMA) on certain conditions regarding the mode of payment and time period for the realisation of export proceeds.

It was informed that the ECC has already allowed the export of a total of 250,000 metric tonnes of sugar on January 3, 2023, and December 15th of last year. Certain queries, however, have been raised by stakeholders in the process of exporting sugar, it added.

To facilitate the export of sugar, and after detailed discussions, the ECC approved the revised conditions, said the Finance Ministry.

It has been decided that the provincial Cane Commissioners will allocate a quota for the export of sugar to the sugar mills within seven days of the issuance of the notification.

The SBP had highlighted that the ECC’s old decision did not specify any timeline for the shipment of the export consignment after approval of the quota. This posed the risk that exporters may avail a quota, but not execute the transaction, or may stretch it beyond the timeframe of two months.

PSMA-Punjab Zone (PSMA-PZ) had requested that the quota for export may be allocated through the Cane Commissioner of Punjab as is done in Sindh.

The PSMA was unable to decide the quota among its members due to disagreements over the share of each mill and the group.

The Pakistan Bureau of Statistics (PBS) reported last week that sugar prices ranged between Rs85 to Rs100 per kilogram in various cities. The maximum price of Rs100 was reported in Karachi, where the average price was also Rs93, according to the PBS.

At the time of allowing the sugar export in December, the ECC had decided that the price for the old stock should not cross Rs90 per kg. This condition, however, is not being implemented in letter and spirit – of which the ECC should take note.

In a major change in the terms, the ECC decided that the export proceeds will be re- ceived either in advance through the banking channel, or within 60 days of opening a Letter of Credit (LC) for export.

As per the old condition, the maximum limit for the realisation of export proceeds shall be within 60 days of opening an LC. This condition was reflected in the Ministry of Commerce’s notification, which was also reiterated by the SBP in its circular, stating that “authorised dealers will ensure obtaining an irrevocable LC from the buyer.”

Subsequently, the SBP said that they were receiving queries from stakeholders for permission to export through advance payments.

The Ministry of Commerce had written a letter to the finance ministry stating that these amendments can be made without referring the matter to the ECC again. The finance ministry, however, did not agree.

Public sector decision-making has become painstaking slow, often leading to a failure in achieving the intended objectives. Had the bureaucracy been efficient, Pakistan would have realised the first export proceed of sugar by now. This could have partially helped in easing the pressure on the external sector.

The ECC also decided that the exporter shall ensure that the consignment is shipped within 30 days of quota allocation. The quota for exporting sugar may be allocated from an already decided pro- vincial quota, through the Provincial Cane Commissioner of Punjab, as already ap- proved by the ECC in case of Sindh.

Earlier, the condition was that the exporter shall ensure that the consignment is shipped within 45 days of quota allocation.


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