PSMA demands extension in settling outstanding credit lines

September 21, 2024 (MLN): Pakistan Sugar Mills Association (PSMA)  has appealed the State Bank of Pakistan (SBP) to extend the date of settling outstanding credit lines of sugar mills of Commercial and Islamic Banks by December 31, 2024.

The association has written a letter to the SBP Governor in this regard and explained the current condition of the sugar industry, as APP reported.

The letter reads that the sugar mills manufacture 12 months of sugar within a short span of three months while they have to make payments to all growers within 15 days of the delivery of sugarcane.

The sugar mills can't manage such huge amounts to make payments within three months for an entire year sugar.

Commercial and Islamic Banks support the sugar industry through seasonal credit lines against the pledge of stocks by providing working capital to run their business smoothly and to ensure timely payments to the sugarcane growers as well.

Sugar industry had 7.54 MMT of government-verified sugar stocks available after crushing season of 2023-24 against its domestic consumption of 6 MMT.

Since then, PSMA has been seeking approval to export surplus sugar of nearly 1.5 MMT to ensure timely payments to growers and to pay off bank loans, but the sugar industry was allowed to export of 0.15 MMT only.

In the given circumstances, it would be impossible for sugar mills to clear approximately Rs200 billion of outstanding credit lines of Commercial and Islamic Banks by September 30, 2024, unless the industry is permitted to export the surplus sugar.

Moreover, due to existing stocks, sugar mills would be compelled to delay the start of crushing season.

The PSMA has requested the SBP to issue instructions to all banks to extend the date till December 31, 2024 for sustaining the local sugar industry causing import substitution of nearly $4 billion.

Due to recent developments in Brazil, the international sugar market has increased by about $60 per ton and reached US $ 586 per ton. It is a better opportunity for the government to allow the export of surplus sugar and earn $600 million of foreign exchange.

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