Pakistan to remove wheat export duty this month

KARACHI, Jan 10 (Reuters) Pakistan will remove a 15-percent duty on wheat exports later this month to help boost overseas sales, a government official said on Wednesday.

''We have decided to abolish the regulatory duty on wheat export,'' Ismail Qureshi, permanent secretary of the Ministry of Food and Agriculture, told Reuters.

''A formal decision in this regard will be announced some time this week or by next week.'' Last month, Islamabad lifted a two-and-a-half year ban on wheat exports by allowing the export of 500,000 tonnes of the grain, but it did not take any decision on abolishing the duty at that time.

Pakistan imposed a 15-percent export duty and then banned the export of wheat in May 2004 after domestic supplies ran short.

The regulatory duty irked traders, who maintained that the exports were unviable.

Qureshi said the government hoped private traders would sell the surplus after the removal of the duty and before the arrival of the new crop in March.

''The duty is being removed to facilitate exporters,'' he added.

The country authorised wheat exports on reports that the wheat crop was likely to reach 23 million tonnes compared with a 21.5 million tonne target for the 2006/07 fiscal year, ending on June 30.

Pakistan, which annually consumes 22 million tonnes of wheat, has carryover stocks of 2.1 million tonnes from last year's crop, leaving an exportable surplus of over 1.5 million tonnes.

Qureshi said the government would sell 400,000 tonnes of wheat from the provincial Punjab government stocks, and another 100,000 tonnes from Sindh government stocks.

''We will issue open tenders in which local as well as international bidders would be allowed to participate,'' he said.

''Whoever offers the highest ex-godowm price will get the grain.'' Last month, Pakistan offered 50,000 tonnes of milling wheat to Bangladesh in a government-to-government deal at 8 per tonne cost and freight.

But Dhaka asked Islamabad to cut the offered price.

Qureshi said the government was considering the request and a decision would be taken soon.

''We can and will adjust the price to a level agreeable to both the governments,'' he added.

Before the export ban, Pakistan's main markets were the Middle East and Africa. It exported 1.7 million tonnes of wheat in the 2002/03 fiscal year (July-June).

The government, under its export refund policy, then paid exporters a maximum of 2,500 rupees (.7) per tonne after shipment, to help cover the cost of transport and cleaning the wheat.

However, it has refused to provide any financial support to wheat exporters this season.

REUTERS PV DS1405