Government gives in to demand of sugar millers

Increases subsidy on sugar from Rs3 to Rs5 per kg.

ISLAMABAD: The government has bowed down to the cartel of sugar millers who will be earning Rs100 million from the national kitty on the supply of sugar to consumers in Ramazan.

In order to provide benefit to sugar mills, the government has reduced subsidy on ghee and cooking oil from Rs10 to Rs8 per kg to offset the impact of increasing subsidy on sugar.

Officials familiar with the development said the government had to reverse its earlier decision of subsidy on sugar following pressure from the sugar millers who quoted higher prices in response to the bids invited by the Utility Stores Corporation (USC).

Earlier, the secretaries committee had proposed a subsidy of Rs5 per kg on sugar in the last meeting of the economic decision-making body but this proposal was turned down and Rs3 per kg was approved.

However, the Ministry of Industries told the Economic Coordination Committee (ECC) in its meeting held on May 21 that sugar millers appeared to have formed a cartel who had quoted an average price of Rs60.40 per kg, which was higher than the prevailing wholesale market price of Rs55-58 per kg. The lowest offered price was more than even the lowest retail market rate.

On the demand of the millers, the ECC raised the subsidy to Rs5 per kg to match the price quoted by the millers.

The meeting was informed that the ECC had approved the Ramazan Relief Package 2015 in its meeting held on April 30. The Ministry of Industries and Production said while the procurement of almost all items was on track, the USC was facing difficulty in the procurement of sugar and pulses.

The ECC was informed that supply of pulses had also been cartelised. The industries ministry said the USC had issued a notice of unfair practice to the parties who had participated in the procurement process.

The Ministry of Industries had proposed that the sale of subsidised sugar at the USC may either be done away with or the subsidy may be raised to Rs5 per kg which would have an additional financial liability of Rs100 million.

The ECC approved the industries ministry’s proposal to raise the subsidy on sugar from Rs3 to Rs5 per kg and reduce the subsidy on ghee and oil from Rs10 to Rs8 per kg to offset the financial impact of raising the subsidy on sugar.

Published in The Express Tribune, May 30^th,  2015.

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