ISLAMABAD:
Sugar barons are pressuring the government to allow the commodities trading agency to buy sugar from millers, but leave it in their silos, reviving memories of a similar move a couple of years ago which caused the kitty losses of Rs2.5 billion and created shortage of the sweetener in times of need.
Trading Corporation of Pakistan (TCP) Chairman Sheikh Anjum Bashir on Thursday told the National Assembly Standing Committee on Commerce that sugar mill owners demanded the Economic Coordination Committee (ECC) of the cabinet to allow TCP to buy sugar from millers. He said sugar mill owners were of the view that production would exceed consumption this year, which is why the government should purchase the ‘surplus stock’.
“I have opposed the demand as there is no logic in buying the commodity and leaving it in their warehouses,” said Bashir.
He said that in 2008-09, TCP had bought 600,000 tons of sugar from the mills, but left it in their silos and when the need arose the millers refused to hand over the stock and sold it in the open market at exorbitant rates. Sheikh claimed that eight sugar mills have been holding 85,000 tons of TCP sugar, despite receiving full payments.
ECC has now directed TCP to recover the default amount, along with a 25 per cent penalty and interest the government paid to banks on the loan it obtained to buy the sweetener till March 31, said Bashir. He further said ECC has authorised TCP to register cases against sugar mill owners who are still refusing to meet contractual obligations.
According to estimates, if the recovery rate remained at nine per cent by the end of March, sugar production will be 3.8 million tons, while 0.4 million tons would be in TCP stocks, which would be sufficient to meet domestic requirements, added Bashir.
“Sugar prices are again inching up and common people do not accept TCP’s claim of surplus sugar stock,” said Standing Committee on Commerce Chairman Engineer Khurram Dastagir Khan.
Tax on sale of fertilisers
On March 15, the government levied 17 per cent tax on sale of fertilisers. During the TCP presentation, it was revealed that despite the levy of sales tax on fertilisers, farmers would still receive fertilisers at fixed prices at government-owned sale outlets.
“The government will pick a subsidy of Rs7.5 billion on account of price differential,” said Bashir. He claimed that urea sold by private producers might be costly, but the commodity being sold at National Fertiliser Marketing Limited outlets should not be expensive
He also disclosed that urea imported from Saudi Arabia, using Saudi commodity financing credit, cost Rs10,000 per ton more than the urea imported by floating international tenders. The landed cost of open market urea was Rs38,475 per ton, against Rs47,258 per ton of Saudi urea.
Additionally, the government absorbs sales tax of Rs10,760 per ton on open market urea and Rs12,804 on Saudi urea.
Bashir said that so far, the government has imported over 810,000 tons of urea – 497,182 tons from the open market and 313,312 tons from Saudi Arabia. He added that the National Fertiliser Marketing Limited has lifted 809,936 tons of sugar, due to which there should not be any shortage in the country.
Published in The Express Tribune, April 01st, 2011.
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