Authorized Dealers (ADs) may find enclosed Ministry of Commerce (MoC)’s Office Memorandum (O.M.) No. 7(2)/2012-Exp.III dated October 3, 2017 regarding the above subject in terms of which Government of Pakistan has allowed sugar mills to export 500,000 MT sugar and freight support as per the terms and conditions mentioned therein.
A. Procedure for submission of applications for allocation of quota
2. ADs are advised to process the export of sugar quota allocation cases as per following mechanism:
a. ADs will forward the requests of sugar mills through their respective Departmental/ Business/Group Heads to the Director, Foreign Exchange Operations Department (FEOD), SBP-Banking Services Corporation (BSC), Head Office, Karachi for approval quoting the reference of this circular letter along with the attested/ authenticated copies of the following documents:
i. Clearance Certificate issued by the concerned Cane Commissioner to the effect that concerned sugar mill has cleared outstanding dues of the farmers upto the last season. Further, after November 30, 2017 the said clearance certificate shall also state that concerned sugar mill has started crushing at full capacity.
ii. Sugar export contract.
iii. Manual Form-E or print out of EFE request in case of electronically generated Form-E through WeBOC.
vi. Irrevocable L/C or advance payment voucher, swift message and reporting schedule/credit advice, as the case may be.
b. FEOD will allocate sugar export quota to sugar mills on first come first served basis.
c. ADs will ensure receipt of a minimum 15% of total contract value as advance payment (evidenced by advance payment voucher, swift message and reporting schedule/credit advice) or obtain an irrevocable L/C from the buyer.
d. All exports including those destined for Afghanistan and Central Asian Republics will also be subject to receipt of export proceeds by wire transfer through banking channel.
e. Exporters must ship the sugar within 60 days from the date of FEOD’s approval regarding quota allocation.
f. In case of non-performance within the stipulated time against the quota allocated by FEOD, ADs will:
i. recover a penalty of 15% of total contract value from the exporter and deposit the same with the FEOD, SBP-BSC, Head Office, Karachi through DD/ PO in favor of Government of Pakistan. In case of partial shipment, the penalty shall be recovered by the AD proportionately.
ii. obtain prior permission from FEOD, SBP-BSC, Head Office, Karachi for return of advance payment received there against from the importer.
g. ADs will submit sugar export shipment update to the Director, FEOD, SBP-BSC, Head Office, Karachi on weekly basis as per the enclosed reporting format (Annexure-I) at firstname.lastname@example.org.
B. Procedure for submission of freight support claims
3. SBP shall disburse freight support to sugar exporters at variable rates to be calculated on daily basis as per the formula mentioned in MoC’s above O.M. based on white sugar price index published by International Sugar Organization ( https://www.isosugar.org/prices.php). 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. Moreover, freight support payment shall be subject to budget allocation by the Federal Government and the respective provincial governments. In case a province decides not to contribute its share of freight support, only 50% of freight support, being federal share shall be paid to the claimant.
4. 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:
a. ADs will forward the shipment-wise requests of sugar mills on prescribed format (Annexure-II) through their respective Departmental/Business/Group Heads to the Director, FEOD, SBP-BSC, Head Office, Karachi or the Chief Manager, 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 the following documents:
i. FEOD’s approval letter for allocation of sugar export quota.
ii. Manual Form-E/Electronic Form-E (EFE).
iii. Goods Declaration Form (GDF).
vi. Certificate issued by the concerned Cane Commissioner to the effect that concerned sugar mill has cleared outstanding dues of the farmers upto the last season and has started crushing on full scale after November 30, 2017.
v. Bill of Lading/ Truck Receipt/ Railway Receipt. In case export has been made through House Bill of Lading, it must be accompanied by relevant Master Bill of Lading.
vi. Commercial / Customs Invoice.
vii. Export Proceeds Realization Certificate / Advance Payment Voucher properly showing utilization. Where shipment has been made against Advance Payment, shipping documents must have been submitted by the AD under Para 27, Chapter 12 of F.E Manual – 2017.
b. Freight support will be allowed only after full realization of export proceeds against E-Form.
c. Sugar mills will approach the respective office through their AD claiming the freight support within 60 days of realization of export proceeds or date of shipment, whichever comes later. No claims will be entertained after aforementioned time period.
d. The SBP-BSC will return discrepant claim to respective AD and the same must be resubmitted after removing the discrepancies within 30 days of return, after which no such application will be entertained.
e. Approved claim will be disbursed to respective AD in its account maintained with SBP-BSC for onward credit to the exporter’s account within 24 hours of disbursement.
f. Format of application by the sugar mills (Annexure-II) and the undertaking by AD (Annexure-III) are enclosed.
5. The provision of freight support will not be available for already utilized sugar export quota from the SBP allowed vide ECC’s decision dated July 18, 2017. The rest of the unutilized quantity (including quota issued but not executed) out of 300,000 MT shall be considered withdrawn.
6. Incomplete requests shall not be considered.
7. Authorized Dealers are advised to bring the same to the notice of all their constituents.
Encl: As above. Annexure I - Annexure II - Annexure III Ministry of Commerce O.M