‘$20.5m export deal from Sudan fails to get government’s nod’

ISLAMABAD: The tobacco sector failed to materialise $20.5 million export deal from Sudan because on time permission was not granted by the government.

Pakistan Tobacco Company (PTC) won $20.5 million contract to export 10-pack cigarettes, but this was not allowed for export purposes. In Pakistan, manufacturing and selling of 10-pack cigarettes is not permissible.

Prime Minister Shehbaz Sharif had constituted a committee, which after holding deliberations, allowed permission of 10 pack cigarettes only for export purposes. The anti-tobacco lobby allegedly propagated against it and termed it as a kiddy pack.

Now, Sudan has diverted this order towards Bangladesh, and Pakistan could not fetch much-needed $20.5 million.

Addressing the media on Thursday, PTC’s Senior Regulatory Affairs Manager Qasim Tariq shared insights into a critical export loss for Pakistan.

Despite support from Special Investment Facilitation Council (SIFC) and endorsement from Prime Minister, the deal could not be materialised.

“Certain clauses of World Health Organisation’s Framework Convention on Tobacco Control (FCTC) were misinterpreted and used as the basis to challenge this export order,” Tariq explained.

“This incident illustrates harmful effects of misinformation and the economic harm that can arise from unchecked influence of certain advocacy groups on public policy”, he said.

PTC representatives said legitimate tobacco industry continues to face challenges, as illicit cigarette sales have reached alarming levels. PTC noted a staggering decrease of 0.8 billion cigarette sticks for the first quarter (July-Sept) of current fiscal year, compared to same period in previous year.

The volume has declined, as it dropped to 6.3 billion sticks in the first quarter of current fiscal year against 7.1 billion sticks in the same period of the last year, registering a decline of 0.8 billion sticks for legitimate and tax-paying cigarettes.

This shortfall of 0.8 billion sticks reflects the heavy toll that illicit trade is taking on legitimate businesses and government revenues, he said.

Citing example of tier-1 brand, PTC representative said it declined from 661 million sticks from pre-Feb 2023 level to 303 million sticks in post-Feb 2023 situation because of highest-ever hike in FED rates.

The FBR’s recent statement 50pc of cigarettes sold in Pakistan being illegal highlights the issues faced by the sector.

It all resulted in an estimated Rs300 billion loss in government revenue, depriving the state of funds which could be invested in public services and development initiatives.