KARACHI, Nov 12: The 10 per cent duty cut on palm oil imports to be effective from January 1, 2008 under the Free Trade Agreement (FTA) reached between Pakistan and Malaysia may prove eyewash for the consumers as it will result in just Re1 per kg decline in ghee and cooking oil prices.

However, the cut in import duty may propel some demand for Malaysian palm oil and importers are likely to shift their focus towards Malaysia from Indonesia. As a result, there is a possibility that Malaysian palm oil prices may remain higher when demand from Pakistan will increase.

Currently Pakistan imports 55 per cent of the total requirement of palm olein and crude palm oil (CPO) from Malaysia and 45 per cent from Indonesia.

Talking to Dawn Pakistan Vanaspati Manufacturers Association (PVMA) chairman Shaikh Amjad Rasheed said that the import duty cut would hardly provide any benefit for the consumers in view of record high edible oil prices.

Currently, the import duty is Rs9,100 per ton on palm olein and CPO which will come down to Rs8,200 per ton from January 1, 2008. He said he had talked to Secretary Industries Khawaja Shahabuddin on Monday and apprised him of crisis situation in the ghee industry.

He said that in addition to the 10pc duty cut from January 1, 2008, the government should immediately offer Rs3,000 per ton relief on imported palm oil. He added that the government should also reduce sales tax to 10pc from 15pc so that consumers could get benefit instantly.

He said he had informed the secretary to check the cotton seed oil prices which had touched Rs3,100 per maund. The arrival of cotton seed oil stands between 400,000-500,000 tons every year.

Consumers have already endured half a dozen increases in ghee and cooking oil rates during the last one year since the palm olein rates in Malaysia and Indonesia had touched record peaks on various reasons particularly surging crude oil prices.

A leading producer of ghee and cooking oil has jacked up its prices to Rs568 per five kg/litre tin from Rs530 few days back, while other makers are set to push up prices of their brands.

Consumers now pay Rs112 per kg for Dalda one kg pouch as against Rs104 per kg.

This was the sixth price hike by the branded ghee and cooking packers since September 2006. Dalda had increased its rate ahead of Ramazan to Rs530 for five kg/litre tin from Rs498. In February 2007, rates were enhanced by Rs4.8 to Rs6 per kg/litre on ghee and cooking oil tin.

Earlier the producers had increased the rate ahead of Ramazan (September 2006) by Rs4 per kg followed by Rs5 per kg in December 2006. In September 2006, five kg ghee tin was available at Rs395.

The current C&F price of imported palm olein has jumped to $980 per ton from $465 in July 2006. The production cost of vegetable ghee leaving aside profit margin of the manufacturers, which was Rs57,415 per ton in July 2006, has increased to Rs93,538 per ton or say Rs93.54 per kg on November 1, 2007.

Cooking oil, about 30 per cent of the total consumption is manufactured from imported soyabean oil, RBD palm olein and edible oils produced in the country. The C&F price of these edible oils has also increased in line with RBD palm olein.

The component of government duties and taxes in the production cost of vegetable ghee/cooking oil in July 2006 was Rs18 per kg, which has now increased to around Rs23 per kg.