Pakistan Sugar Mills Association (PSMA) has sought a three-month extension in the validity of sugar exports with a rebate due to expire on March 31, 2016 as export of sugar remains unattractive except to Afghanistan, despite a rebate of Rs 13 per kg.
Well-informed sources in Commerce Ministry told Business Recorder that the PSMA has written a letter to the Commerce Minister, Engineer Khurram Dastgir Khan, requesting him to move a summary to the Economic Co-ordination Committee (ECC) of the cabinet, headed by Finance Minister, Senator Ishaq Dar, to get an extension in the validity period.
The ECC, in its decision on December 7, 2015, approved the export of 0.5 million tons of sugar until March 31, 2016, of which only contracts of 253,000 tons have so far been registered with State Bank of Pakistan despite the fact that the Commerce Minister had allowed an export rebate of Rs 13 per kg.
Currently, sugar is only being exported to Afghanistan where the market is limited therefore, the sanctioned export quantity could not be entirely exported within the stipulated period.
The crushing season has almost come to a close and the expected production is not likely to fall short of the estimates submitted to the Sugar Advisory Board (SAB). “Keeping in view that entire scenario, the sugar industry has requested the federal government to extend the validity for export of sugar until June 30, 2016,” sources told.
The Association, in a letter written on March 7, 2016 to Finance Minister Senator Ishaq Dar had complained that SBP is not accepting claims being submitted for rebate of Rs 13 per kg against export of sugar. SBP had advised the authorised dealers to hold claims until funds are released by the Ministry of Finance.
“ECC had approved the rebate with the spirit to ensure timely payments to farmers therefore PSMA has sought intervention from Finance Minister for immediate release of export rebate to fulfil our obligations at the earliest,” the sources quoted PSMA as saying in the letter.
The Finance Minister has also been communicated that the sugar industry would remain cash strapped in the absence of export rebate resulting in delayed payments to the sugarcane growers. When contacted, Chairman PSMA, Punjab said that the export of sugar is still unattractive despite approval of a rebate of Rs 13 per kg.
“PSMA would have exported the entire approved quantity of 0.5 million tons sugar within the stipulated period and pocketed rebate if the international market was lucrative. The fact is that the international market is still depressed; that”s why we are seeking another extension in validity period for export,” he added.
According to the Ministry of Industries and Production, the estimated cost of sugar is Rs 50/kg at sugarcane price of Rs 180/ 40 kg. The sales tax on sugar is Rs 4/ kg. However, exports are zero-rated and sales tax refund is claimed by the sugar exporters against sales tax paid on inputs.
Insiders claim the government is expected to approve another extension in export validity period for 45 days instead of 90 days fearing that any such decision can lead to increase in prices of the commodity during Ramazan.
Last week, Commerce Minister presided over a meeting of an inter-ministerial committee on sugar to review the sugar export position, available stocks and the price trend in domestic market.
The representative of Ministry of Industries revealed that stock of 3.55 million metric tons of sugar is currently available in the country which would be sufficient for domestic consumption till 30th November 2016. Therefore, the availability position of sugar stocks during Ramazan and beyond is satisfactory.
Source: Business Recorder