ISLAMABAD: The sugar mills, among others, would be the major gainers as the proposed EU programme would also allow duty-free export of ethanol to the EU countries.
The country on average exports 250,000 tons of ethanol annually and after the introduction of the zero-rated regime, exports may even reach 300,000 tons annually.
Commerce Secretary Zafar Mahmood said on Friday that the EU has unilaterally given trade assistance to Pakistan and 30 per cent duties on export of ethanol from Pakistan have been withdrawn.
“This will give a boost to sugar industry and production at the distilleries would enhance apart from financial benefits to the sector.” Mr Mahmood said.
Shunid Qureshi, former chairman of Pakistan Sugar Mills Association, pointed out that the proposal would be forwarded to all EU states for approval and it has to be cleared by the World Trade Organisation (WTO) before being implemented.
Pakistan remained top molasses exporter by 2004 but gradually all exports were converted to the value-added product ethanol, and distilleries enjoyed duty-free ethanol export to the EU between 2002 and 2004. Although 30 per cent duty was imposed in 2005, export of ethanol remained steady.
Currently Pakistan has 20 distilleries which are operating at 80 per cent capacity, and the bulk of ethanol produced is exported. However, a nominal amount of high quality ethanol is used by the PSO to market its 10 per cent ethanol mixed petrol E-10.
“The distilleries in the country are mostly producing industrial grade ethanol, but many have been upgraded to produce fuel grade ethanol,” Shunid Qureshi said.
However, none of the distillery in the country is producing edible grade ethanol used mainly in the beverage industry to make alcoholic drinks as they need special permission from the importing country.
Meanwhile, the Federal Board of Revenue has issued SRO No 933(I)/2010 notifying zero per cent duty on import of raw sugar of both kinds, cane sugar and on beet sugar by the private sector. Welcoming the decision, the PSMA said that import of raw sugar would help cover the gap created by sugarcane shortage, but sugar mills association has reiterated the demand that open permission might create an over-flooding of raw sugar in the country.