Trading agency to purchase 0.4m tons of sugar from mills

ECC takes the decision despite previous bad experience.

Shahbaz Rana May 07, 2011


The government on Saturday allowed the national trading agency to procure 400,000 tons of sugar from the millers despite the fact a similar move a couple of years ago had sparked a legal battle besides causing the commodity’s shortage in the market.

The Economic Coordination Committee (ECC) of the cabinet, headed by Finance Minister Dr Abdul Hafeez Shaikh, took the decision in a bid to “replenish stocks of the Trading Corporation of Pakistan (TCP)”. Sugar will be procured in quantities of 50,000 tons per month.

However, ECC constituted a committee, headed by the State Bank of Pakistan governor, to draft modalities for procuring the sweetener with a three-day deadline for framing a mechanism to “ensure that the crisis does not emerge in future”.

In 2008-09, TCP 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. TCP Chairman Sheikh Anjum Bashir told a National Assembly panel on March 31 that eight sugar mills had still been holding 85,000 tons of TCP sugar, despite receiving full payments.

TCP has initiated a legal process against the defaulting mills to recover the default amount of Rs2.5 billion along with 25 per cent penalty and interest the government paid to banks on loans obtained to buy the sweetener.

This year, sugarcane production crossed 55 million tons, almost six million tons more than last year. Sugar barons have once again become successful in convincing the authorities to procure the commodity from them. It was not clear whether the government will again keep its stock in their silos or shift it into state-owned warehouses.

ECC also allowed import of 150,000 tons of urea for the Kharif 2011 season in order to meet shortages, caused by gas supply cuts to fertiliser factories.

Demurrages waived on Afghan cargo

ECC also waived demurrage charges of Rs1.2 billion on the Afghan transit cargo that got stuck at Pakistani ports for three months after last summer floods. During Prime Minister Syed Yousaf Raza Gilani’s visit to Kabul in December last year, the Afghan government had requested him to waive the charges. There were 628 un-cleared containers at various ports, prompting the customs authorities to levy the charges.

More gas for fertiliser plants

ECC allowed the Ministry of Petroleum and Natural Resources to divert 40 million cubic feet of gas from the power sector to fertiliser companies under an understanding between both the sectors. As per the arrangement, the power plants will now be run on diesel and the fertiliser sector will pay two-third of the increase in cost. However, the money will not be released out of their profits but the fertiliser sector will pass it on to the consumers.

On a summary moved by the petroleum ministry for the supply of gas to the Karachi Electric Supply Company, ECC asked for a detailed presentation on the formula for the price differential adjustment which will be reimbursed to KESC by the finance ministry.

Published in The Express Tribune, May 8th, 2011.


Syed Khurram Mohiuddin | 10 years ago | Reply Classic example of "rent-seeking"!
Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ


Most Read