Statement of clarification about the Regie's tobacco pricing process

13 May 2020
Statement of clarification about the Regie's tobacco pricing process

Under the current economic circumstances, the Regie would like to clarify the following to the public:

 
1. Since 1978 the Ministry of Finance has been undertaking to set the wholesale price of tobacco products delivered to the Heads of Sales in US Dollar, who, in turn, deliver such products to retailers – thus to the customer – exclusively in Lebanese Pound according to the circulated exchange rate.
 
2. As a matter of fact, the Regie pays the price of ready-to-use products in US Dollar. As well, the majority of raw materials used in the production of cigarettes are purchased in this foreign currency either from local factorie(cardboard – printings – filters – aluminum…) or overseas (tobacco – cigarette papers – flavors…). Actually, local Lebanese tobacco (oriental tobacco) holds no more than 5%of the production process, since the American blend is the Cedars’ best-selling flavor.
 
3. The Regie has chosen to calculate the average price between its payments in US Dollar and those in Lebanese Pound; whereas the price that the Regie has set for the customer is no more than 65% of the Dollar’s circulated rate. Further clarification is detailed in the below table:
 

Cedars price per pack before the crisis

Price per pack against the market’s (current) exchange rate

Price per pack against theRegie’s(current) arrangement

1,250 L.L.

3,750 L.L.

2,250 L.L.

 

4. The Regie is an investment enterprise (industrial and business) in the first place, therefore cash-flow in foreign currencies ensures its continuation and the production process, preventing the loss of an essential source of income for the national treasury.
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