Commercial banks not issuing letters of credit
to edible oil importers
Pakistan’s commercial banks
are not issuing letters of credit for edible oil imports
despite the exclusion of the sector from the condition of prior permission from
the central bank.
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 same could be done 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 tons per annum. The existing domestic stocks are sufficient to meet the demand for only three to four weeks.