Sugar mills may face penalty for non-utilization of export quota

Karachi, February 23, 2019: The State Bank of Pakistan (SBP) has announced disbursement of subsidy (freight support payments) on export of sugar to the mills in Punjab province.

However, in case of non-performance within the stipulated time against the quota allocated, authorized dealers have been asked to recover a penalty of 15 penalty of total contract value from the exporter.

Finance Department, Government of the Punjab has already asked for release of funds for freight support on export of sugar subject to terms and conditions mentioned therein.

In this respect, SBP will disburse freight support payments to sugar mills in Punjab Province at variable rates to be calculated on daily basis as per the formula mentioned in the above letter based on white sugar price index published by International Sugar Organization.

Further, the international sugar price on the date of sugar export quota allocation will be applicable for calculation of rate of freight support irrespective of the export price.

Accordingly, ADs are advised to process the cases of eligible sugar mills for cash freight support against the export of sugar as per following mechanism:

ADs will forward the shipment-wise requests of sugar mills on prescribed format through their respective Departmental to the Director, FEOD or field office of SBP-BSC, as the case may be, for claiming freight support quoting the reference of this circular letter along with the attested / authenticated copies of required documents.

Freight support will be paid to sugar mills on first come first served basis. Freight support will be allowed only after full realization of export proceeds against E-Form.

According to SBP, exporters must ship the sugar within 60 days from the date of Foreign Exchange Department’s approval regarding quota allocation to be eligible for freight support.

Both date of approval and date of shipment are included in counting of the 60 days period. For shipment by sea, the date of shipment is the “Shipped on Board” date on Bill of Lading. For shipment by land route, the “Out of Charge” date will be considered as the date of shipment.

It is reiterated that in case of non-performance within the stipulated time against the quota allocated by FEOD, ADs will recover a penalty of 15 penalty of total contract value from the exporter and deposit the same with the FEOD, SBP-BSC, through DD/ PO in favor of Government of Pakistan.

In case of partial shipment, the penalty will be recovered by the AD proportionately. Further, sugar mills/ exporters who are defaulters of banks will not be allowed to export sugar/ paid freight support.

Sugar mills will approach the respective office of SBP-BSC through their AD claiming the freight support within 60 days from realization of export proceeds or date of shipment, whichever comes later.

Further, both dates of submission of claim and realization of export proceeds or date of shipment, whichever applicable, will be considered in calculating number of days. No claims will be entertained after aforementioned time period.

SBP-BSC will return discrepant claim to the respective AD and the same must be resubmitted after removing the discrepancies within 30 days from the date of SBP-BSC’s letter (both dates inclusive), after which no such application will be entertained.

Only such sugar mills having presence in Punjab and submitting certificate from the office of Cane Commissioner Punjab at the time of allocation of sugar export quota will be eligible for sugar freight support.  

While, approved claim will be disbursed to the respective AD in its account maintained with SBP-BSC for onward credit to the exporter’s account within 24 hours of disbursement.


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