Sugar mills feared to face financial crunch

Association laments sugar price has been fixed below production cost

LAHORE:

Officials of the Pakistan Sugar Mills Association (PSMA) Punjab Zone have warned that owing to the ongoing crisis, sugar mills are likely to face financial constraints and default on payment of their dues in the coming days.

In a letter written to Finance Minister Hammad Azhar, PSMA officials highlighted that due to the fixing of sugar price at just Rs80 per kg by the government of Punjab, all provincial mills were facing a financial crisis.

“The cost of sugar production in Punjab-based mills has soared to Rs105.77 per kg on the back of a rise in sugarcane price to Rs350 per 40 kg, although the government of Punjab has fixed the sugarcane support price at Rs200 per 40 kg,” the letter stated.

Read: CCP opposes fixing sugar price

Keeping in view the situation and problems of the sector, the sugar industry was heading towards a crisis-like situation after which most of the mills might default on bank loan repayments, payments to growers, sales tax dues, income tax and other government dues, they said.

Apart from these, the disbursement of salaries and wages to employees would also be affected as thousands of families directly or indirectly depended on the sugar industry, the letter said.

Published in The Express Tribune, April 14^th, 2021.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.