Shortage of ghee, cooking oil looms.

KARACHI -- With rising prices of wheat flour and chicken already hitting most household budgets, two more staples - ghee and cooking oil - are also going to be short in supply as well as costlier ahead of the holy month of Ramazan if corrective measures are not taken immediately, it emerged on Thursday.

Producers are fast running out of palm oil, soybean oil and sunflower following banks' reluctance in opening the letters of credit (LCs) and retiring documents for clearance of goods despite the fact that these raw materials were listed as essential items by the State Bank on Dec 27, 2022.

Lifting of 358,000 tonnes of edible oil from the Customs Bonded Warehouses has been suspended as banks are turning down requests for opening of LCs and retirement of documents.

The State Bank has been inforAmed that commercial banks have conveyed to importers-cum-manufacturers that edible oil has been excluded from its list of 'Essential Items' with immediate effect.

SBP intervention sought in opening of LCs, clearance of containers

As a result, the default in retirement of LCs in favour of foreign suppliers is attracting late payment surcharge and demurrage while the rupee continues to lose its value against the dollar, making imports costlier.

Commenting on the situation, Pakistan Vanaspati ManufacAturers Association (PVMA) secretary general Umer Islam Khan pointed out that palm oil rate has already gone up to Rs14,000 per maund from Rs13,000. This, he added, has translated into a jump of Rs26 per kg/litre in prices of ghee and cooking oil.

While 358,000 tonnes of raw material are awaiting clearance, around 175,000 tonnes loaded in about 10 vessels are at the outer anchorage of Karachi and Bin Qasim ports, awaiting discharge.

Mr Khan said that in case the issue of LCs retirement lingers on, consumers would face another price hike of Rs15-20 per kg/litre in prices.

Arrival of palm oil, sunflower and soybean oil takes at least 60 days to reach Pakistan from foreign destinations.

He called upon the authorities concerned to resolve the issue immediately to avert a ghee and oil crisis in Ramazan, which may start in the third week of March. Demand for oil and ghee items soars by 20-25 per cent in the fasting month, Mr Umer said.

Letter to SBP

PVMA Chairman Sheikh Abdul Razzak in a letter to SBP Governor Jameel Ahmed said that 90pc of edible oil consumed in the country is imported to meet the national requirement of over 4.5 million tonnes...