Fata, Pata yet to reap benefits of duty waiver on edible oil import

LAHORE: Tax and duty relief to only eight vegetable ghee and oil manufacturers in FATA/PATA is unable to bring down prices in the area rather the step cost almost Rs5 billion to the national exchequer in first three and half months of the ongoing fiscal.

The federal government had waived off all the duties and taxes to the tune of over Rs60,000 per ton on ghee/oil manufacturers in FATA/PATA which reduced 20 per cent the production cost of these units.

However, the relief did not reflect as far as consumer prices were concerned which remained unchanged at Rs 290-300 per kg/liter range.

According to official import data about FATA/PATA units, the ghee/oil manufacturing units in the region had imported more than 82,000 metric ton edible oil by Oct 15. The import of these units was reasonably higher than their overall import during the last fiscal year.

The trend suggested that some of the players had imported edible oil more than the last year. One big player having ghee/oil manufacturing units other than the region had imported over 10,000 ton edible oil for its FATA/PATA unit in three and half months as compared to the last year’s overall import of 7,457 ton.

Another player had imported 18,820 metric ton edible oil during this period which was more than half of its last year’s overall edible import of 27,709 metric ton. Similarly, yet another player had imported 8,250 metric ton edible oil in just three and half months which was also higher than half of its last year total import of 16,485 metric ton.

The data suggested that expect for a couple of units, most of the players in the FATA/PATA region had imported edible oil much higher than their last year’s import. The import pattern suggested that the duty exempted edible oil was being supplied to the settled markets to abuse the benefit given specifically for the FATA/PATA region. This was also creating a disturbance in the overall industry in the settled areas in Punjab, and Sindh.

The industry was unable to compete with these players who were importing edible oil without duty while the settled area importers had to pay all the duties and taxes. If this import pattern would continue in the remaining fiscal year, it would create a substantial revenue impact which would be in billions on the kitty, as the settled areas units would reduce their import of edible oil and start purchasing it from the FATA/PATA-based units. These FATA/PATA region players were also attracting the settled areas players to purchase edible oil from them at lower rates.

There was a huge difference between the consumption and import of edible oil in the FATA/PATA region. The total consumption of the region was only 2.4 percent while it was importing 7.57 percent of edible oil of the country’s total import. Thus, only eight players of the region are importing 5.17 percent more edible oil than its consumption. The higher import of edible oil was being used in the settled areas.

According to source, some of the players with political backing had started manipulating the situation as their edible oil import was almost double within three months. They said that these players were selling the non-duty/taxes edible oil in the market. Even the FATA/PATA-bound supplies were not reaching there and culminating at Karachi and other parts of the settled areas.