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Commercial banks refuse to issue letters of credit to edible oil importers

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1 year ago

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  • Edible oil importers, ghee manufacturers told their LoCs can’t be opened at interbank exchange rates.
  • Banks willing to do business if importers open letters at Rs250 per dollar.
  • PVMA chairman requests SBP to address issue immediately.

LAHORE: Commercial banks are refusing to issue letters of credit for edible oil imports despite the exclusion of the sector from the condition of prior permission from the central bank, The News reported Friday. 

Edible oil importers and ghee manufacturers have been informed unofficially that their letters of credit cannot be opened at the interbank exchange rates. However, the commercial banks were very much willing to do business with these importers if they were willing to open credit letters at Rs250 and above the exchange rate against a dollar.

Pakistan Vanaspati Manufacturers Association (PVMA) Chairman Sheikh Abdul Razzaq in a letter to the State Bank of Pakistan (SBP) governor said that “the ‘Commercial Banks’ are conveying to the importers-cum-manufacturers of edible oil that with immediate effect the edible oil has been excluded from the list of ‘Essential Items’ and hence turning down the requests for opening of L/Cs/retirement of documents”.

He further mentioned that the un-hindered opening of letters of credit/retirement of documents was inevitable. It should be given priority as accorded by SBP earlier vide EPD circular letter no. 20 of 2022 dated December 27, 2022 to avoid any crisis in the country, which could lead to increase in prices of cooking oil/ghee and shortage due to non-availability of the raw material (edible oil).

Pakistan imports 90% of its edible oil demand to meet the national requirement of over 4.5 million metric tonnes per annum. The existing domestic stocks are sufficient to meet the demand for only three to four weeks. However, the interruption in opening letters of credit could disrupt the smooth supply line and result in market disruption.

PVMA chairman requested the SBP to address the issue immediately and set aside the likely panic in the market, which might translate into a price hike, hoarding or retarded imports resulting in shortages.

“The industry is experiencing a unique and unprecedented kind of challenge wherein despite of sufficient stocks discharged in custom bonded warehouses at Karachi, it is unable to lift them due to refusal by banks to retire the documents,” he said. 

Razzaq urged the SBP to direct the ‘commercial banks’ to honour the edible oil importers requests for credit letters and further inform the general public through media campaigns.

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The inaugural flight of Azerbaijan Airlines is between Baku and Karachi.

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3 hours ago

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The national airline of Azerbaijan launched direct flights from Baku to Karachi today. There will be two weekly flights on this route, on Thursdays and Sundays.

The first flight will land in Karachi, and Azerbaijan’s ambassador, Khazar Farhadov, will be there to greet it.

This evening also marks the departure of the inaugural flight from Karachi to Baku, in addition to the arrival of the flight from Baku.

Azerbaijan Airlines said last month that it would be growing its network and flight operations in Pakistan.

Aviation insiders have verified that Azerbaijan Airlines is preparing to launch service to Karachi in the coming month of April.

In addition to its current services in Islamabad and Lahore, the airline plans to launch its Karachi route on April 18, with the inaugural flight anticipated to depart on that date.

Azerbaijan Airlines has been given permission to operate flights on the Karachi route, according to sources within the Civil Aviation Authority (CAA).

Following a bilateral agreement between the two nations, Azerbaijan Airlines has been given permission to extend its operations in Pakistan.

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Fly Jinnah opens a new route internationally.

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3 hours ago

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Two weekly flights will be the starting frequency of the new route, which will connect the two cities.

According to a representative for Fly Jinnah, the company is pleased to announce the opening of a third international route from Islamabad to Muscat, the capital city of Oman, marking another significant milestone after the successful debut of flights from Islamabad and Lahore to Sharjah.

According to him, this development is in line with our goal of giving our clients more options for reasonably priced, value-driven local and international air travel.

The airline serves five main cities in Pakistan: Karachi, Lahore, Islamabad, Peshawar, and Quetta. Its fleet consists of five Airbus A320 aircraft, all of which are contemporary.

In addition to the current flight path to Sharjah, United Arab Emirates, this new route expands Fly Jinnah’s network of foreign destinations.

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Tajir Dost app: traders don’t seem interested in registering

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To tax retailers in Pakistan, the Tajir Dost app was released. The sources stated that the government hopes to tax 3.5 million merchants through the app.

Ajmal Baloch, the president of All-Pakistan Anjuman-e-Tajran, stated that he made reservations with FBR on the SRO within a week.

The Federal Board of Revenue (FBR), according to him, cannot be a “Tajir Dost” because of its unethical actions.

Baloch believed that since electricity bills allow traders to pay a predetermined advance income tax, further taxes are unnecessary.

The trader, according to him, is already paying thirteen different kinds of taxes on the commercial meter. “A trader already pays between Rs. 15,000 and Rs. 20,000 in taxes annually, but you are requesting Rs. 1,200 per month in taxes.”

Mr. Ajmal summoned representatives of the Federal Board of Revenue (FBR) to a meeting with the trade associations to talk about the indirect taxes that the merchants are paying.

Additionally, he claimed that FBR officers are charging the traders, the majority of whom are less educated, “monthly charges.”

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