Govt. gives conditional permission to PSMA to export sugar

ISLAMABAD: Federal government has given the conditional permission to Pakistan Sugar Mills Association to export sugar. PSMA was demanding permission due to excessive production of sugar in the country.

The most striking condition for sugar export eligibility is for mills to start crushing after November at full capacity throughout the crushing season.

A cash freight subsidy at the rate of Rs10.70 per kg will be given to sugar millers on the export of sugar. The federal government and provinces will share the cash support subsidy on 50:50 basis. No time limit or deadline has been attached with the export of sugar.

According to a Ministry of Commerce order, the freight support was linked with the international price of sugar. The current cash support was calculated by considering the cost of local sugar production as calculated by the Ministry of Industries and Production (MoIP).

Currently, the international sugar price is recorded at $376 tonnes. However, the amount of subsidy will be decided on a sliding scale between the international price of $376 tonnes and $499 per tonnes – the internal sugar price which equals with the cost of production as calculated by the MoIP.

As the price in international market reaches $499 per tonne, the State Bank of Pakistan will stop providing the freight subsidy to exporters.

Moreover, the SBP will record the prevalent internal price on the date of issuance of quota and calculate the amount of freight support that the exporter would become eligible to on utilisation of export quota.

The SBP will approve export quota and monitor on first come first basis. Only those sugar mills will be allowed to export which have cleared outstanding dues of farmers relating to last season.

To ensure predictability, millers were made bound to complete exports within 60 days of quota allocation by the SBP. In case of non-shipment within the deadline, a non-performance penalty of 15pc will be imposed on the respective miller.

According to the ministry’s order, the provision of freight support will not be available for already utilised sugar export quota from the SBP allowed under the economic coordination committee decision on July 18, 2017.

To look into the domestic price of sugar, the prime minister has constituted a committee which will meet during first week of every month to review the sugar stock, export and price situation.

In case of any abnormal increase in the domestic price of sugar from the level of Rs54.87per kg on Sept 7, the committee will recommend to the ECC to halt further exports.