The edible oil industry has asked the State Bank of Pakistan (SBP) and Ministry of Finance to direct the commercial banks to honor its request for the opening of Letters of Credit (LCs) to avoid a national crisis and shortage of ghee and cooking oil in Pakistan.
In a communication to the Finance Ministry and the SBP, Pakistan Vanaspati Manufacturers Association (PVMA) Chairman Sheikh Abdul Razzaq said on Thursday that 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 LCs and retirement of documents.
Over 90 percent of edible oil is import dependent to meet the national requirement of over 4.5 million metric tons per annum. The industry’s existing domestic stocks are sufficient to meet the demand for only 3-4 weeks, therefore, the un-hindered opening of LCs and retirement of documents is inevitable and must be given priority as accorded by SBP earlier vide EPD circular letter no. 20 of 2022 dated 27th Dec 2022.
He said that the said issue must be addressed by SBP immediately to set aside the likely panic in the market, which may translate into price hikes, hoarding, or retarded imports resulting in shortages.
The industry is experiencing an unprecedented challenge wherein despite sufficient stocks discharged in custom bonded warehouses in Karachi, the industry is unable to lift them due to the refusal by banks to retire the documents. It is resulting in negative market sentiments and drying up of supply-chain of ghee and cooking oil.
Source: Pro Pakistan