Sugar export subsidy: Punjab was pressured at mill owners’ behest, says officials

Former provincial food minister claims his advice to resist coercion, take action against sugar barons was ignored

LAHORE: The Punjab government was ‘pressured’ at the behest of mill owners into approving the controversial subsidy for sugar export, a former provincial minister and officials speaking on condition of anonymity have alleged.
The subsidy and the federal government’s move to allow sugar and wheat exports became the subject of controversy after an inquiry committee directly connected both steps to the hike in both commodities’ prices. In its report, made public a week ago, the panel revealed that Punjab’s sugar barons maximised their profits by availing the subsidy and using exports to justify the rise in sugar price in the local market.
According to sources in the federal and Punjab governments, the decision to grant the subsidy to sugar producers was prompted by two developments. On one hand, the Economic Coordination Committee (ECC), while deciding to allow sugar exports, asked the province to subsidise the commodity.
“Minutes of the ECC meeting show the panel made it clear the federal government would have no objection if the province made a decision regarding the subsidy,” one official told The Express Tribune on condition of anonymity. “The Punjab government was informed of this in writing. This is why it the centre now appears is no longer opposing the former’s decision and instead focusing on misuse of the subsidy.”
Around the same time as the ECC decision, sugar cane farmers had been staging a protest in Lahore prompted by mill owners’ move to halt crushing and purchase of the crop. According to Punjab government sources, the owners of prominent sugar mills indirectly supported the protest in order to pressure authorities into granting them subsidies.
“I urged the chief minister to not succumb to pressure from mill owners. I even advised him to launch use official machinery to force them into reopening their mills,” former Punjab food minister Samiullah Chaudhry told The Express Tribune. Chaudhry resigned from the post earlier this week following allegations that he had failed to reform the food department. “But my suggestion was ignored.”
After receiving ECC’s signal, the sugar export subsidy was placed on the Punjab cabinet’s agenda. According to sources, the provincial cabinet held ‘open discussion’ on the matter and ‘unanimously’ agreed to grant it.
Ex-food minister Chaudhry supported the claim. “The entire cabinet is responsible for the subsidy. Not a single minister opposed the proposal in the meeting,” he said.
Although, Punjab Finance Minister Hashim Jawan Bakht distanced himself from the decision and insisted he had expressed ‘dissatisfaction’, both Chaudhry and other government sources alleged he raised no objections. According to sources, Bakht’s department even issued note advising the government to ‘move past the subsidy issue’.
However, Punjab officials speaking anonymously insisted that their government should not be the sole target of criticism. They claimed that certain sugar mill owners had influenced the federal government into pressuring Punjab over the subsidy. They also pointed out that the Punjab chief minister had approved several subsidies by issuing summaries in the past and no objections were raised then.
When contacted, Punjab government spokesperson Mussarat Jamshed Cheema admitted that the provincial cabinet was asked to approve the subsidy after the ECC allowed sugar exports. She also defended the move by saying “this is not the first time a subsidy had been granted for sugar exports.”
“The fact of the matter is that many in previous governments were part of a sugar cartel and used to subsidise sugar exports all the time,” she said. “The truth is coming to light now because Prime Minister Imran Khan and Chief Minister Usman Buzdar do not own any sugar mills. Our government will not allow itself to be blackmailed by the sugar cartel,” Cheema added. “Wait for April 25. We will implement all recommendations that the inquiry committee will make.”
On the other hand, Special Assistant to the Prime Minister on Accountability Barrister Shahzad Akbar denied allegations that the federal government had pressured any province into granting any subsidy. “The prime minister is completely out of this picture,” he insisted.
Akbar also said the federal government was not completely opposed to the idea of subsidies. “Both federal and provincial governments have announced various subsidies in the past, but in the case of this one, the basis does not appear to be right,” he said. “Why is sugar more expensive than before? The mechanism of this subsidy is what we have objections against,” he added.