The Islamabad Chamber of Commerce and Industry (ICCI) on Thursday warned that the resistance of commercial banks towards opening the letters of credit (LCs) of edible oil importers would create a shortage in the supplies of ghee and cooking oil in the market, leading to further hikes in the prices of these staples.
Despite the fact that soybean oil, palm oil, and sunflower were listed as essential items by the central bank on Dec 27, 2022, producers are fast running out of these raw materials following the banks’ reluctance in opening the LCs and retiring documents for authorization of goods.
Acting President of ICCI Faad Waheed said in a statement that the existing domestic stocks of the edible oil can “hardly meet” the need of 3 to 4 weeks, Mr. Waheed said while stressing that it was crucial to ensure unhindered opening of LCs/retirement of documents to prevent any shortage of this vital food item in the market.
The SBP had permitted imports related to essential sectors such as food including edible oil and wheat, which was warmly welcomed by the traders related to the food sector.
However, according to recent reports, commercial banks are now conveying to the importers-cum-manufacturers of edible oil that the edible oil has been excluded with immediate effect from the list of essential imports as a result of which banks have started turning down their requests for opening of LCs/retirement of documents, the president highlighted.
“This situation was creating a panic-like situation in the market,” Faad said, adding that nearly 90% of the country’s edible oil was produced from imported oil seeds to meet the national needs of over 4.5 million metric tons per year.
Lifting of 358,000 tonnes of edible oil from the Customs Bonded Warehouses has been suspended after the banks turned down requests for the opening of LCs and retirement of documents.