A ministerial panel on Monday gave the green light for a Rs10 per kg increase in the price of sugar at utility stores just a fortnight before the advent of Ramazan, apparently wilting under pressure from vested interests.
The objective of the move is to counteract against hoarding by profiteers during the holy month. But far from easing the pains of those at the bottom of the pile, the ministerial committee decided to increase the price of the sweetener.
The six-member committee once again relied on the Trading Corporation of Pakistan (TCP) to import 375,000 metric tons of sugar to replenish supplies, which it had earlier held responsible for the failure to import 1.2 million metric tons of the commodity by June 30.
The Economic Coordination Committee (ECC) of the Cabinet on July 20 had mandated the panel to take any decision in three days to improve sugar supply in the market. It had even authorised the committee to import sugar by either negotiating deals directly with the private sector or by tendering, whichever way the sweetener reached the country quickest.
The committee was constituted after the TCP failed to import 1.2 million metric tons of sugar on the government directive to meet the shortfall between production and consumption. The government had estimated the shortfall of over one million metric tons. At the last ECC meeting, it was told that official sugar stock was sufficient only for 13 days.
Minister for Industries Mir Hazar Khan Bijarani chaired the meeting attended by ministers of food, science and technology, petroleum and natural resources, finance and economic affairs and deputy chairman of Planning Commission.
The committee fixed the sugar price at Rs55 per kg, up by Rs10 from the currently-pegged official rate of Rs45 per kg. The government took this decision to avert pressure from the utility stores after the commodity prices started witnessing an upward trend in the run-up to Ramazan. The new rates will take effect from the first day of the holy month. After Ramazan, according to the committee decision, the difference between the open market and utility stores would not be of more than Rs10 per kg. This is a broad hint that the commodity prices would further register a Rs5 per kg increase after Ramazan as the market rate is hovering above Rs70 per kg.
“The crisis-like situation emerged because the cabinet failed to get its decision of restricting raw sugar export implemented,” said Iskandar Khan, president of All Pakistan Sugar Mills Association. He said despite domestic shortfall of 100,000 metric ton, sugar was smuggled to Afghanistan.
However, according to the outgoing chairman of the Competition Commission, the current situation surfaced as the government failed to implement the recommendations of the regulator under the influence of vested interests.
The committee decided that in order to improve sugar supply in the market provinces would buy 100,000 metric ton sugar from the TCP on cash before Ramazan.
It also decided that TCP will complete the tendering process for import of the remaining 375,000 metric tons of white sugar on schedule. The TCP would open a tender of 200,000 metric ton on July 31 and a second of 175,000 metric ton on August 8.
The committee also recommended allowing duty-free import of 500,000 metric ton of raw sugar till November 30, 2010 on a first come, first served basis.
The committee also decided that with the completion of the current sugar import process the market forces will be allowed to prevail and the private sector would be encouraged to import sugar.
Published in The Express Tribune, July 27th, 2010.