Sugar sector monopoly to cost $110m

Govt to import sugar to build reserves, offload during shortages to stabilise prices

Zafar Bhutta July 27, 2021
Industries Ministry pleaded the ECC that the Finance Division should arrange foreign exchange of $110 million for the import of 200,000 metric tons of sugar. PHOTO: FILE


The monopoly of sugar barons is going to cost the country $110 million as the government has decided to import 0.2 million tons of sugar to build strategic reserves to stabilise the prices.

Sources told The Express Tribune that the government would offload this imported sugar at a time when sugar millers are creating shortage to hike prices.

The country has witnessed a significant increase in prices of sugar after the Pakistan Tehreek-e-Insaf (PTI) government came to power.

Prime Minister Imran Khan had announced to take steps and an inquiry commission on sugar was formed to take action against those involved in hoarding and creating artificial shortage to hike prices.

Now, the cases are under investigation.

Keeping in view the past situation, the government has decided to import sugar. However, it is going to cost foreign exchange amounting to $110 million. The total funds required will be Rs18 billion, which also includes storage cost of sugar to maintain reserves in the country.

Sources said that the Ministry of Industries and Production had tabled an additional agenda in a recent meeting of the Economic Coordination Committee (ECC) without seeking comments from the stakeholders.

The Ministry of Industries and Production had sought permission of the ECC chairman to present the case for consideration of sugar import.

As the deadline of seven days prior to the meeting, as stipulated in Rule 18(6) read with Rule 23(4) of the Rules of Business, 1973, was not adhered to due to the urgency, the Cabinet Division could not examine the summary.

The ECC chairman allowed the request to table the summary in consideration of provisions of the aforesaid rule.

The Ministry of Industries and Production had informed the ECC about the case of sugar import being an urgent matter. It had tabled a set of proposals and sought approval of the ECC.

Read More: Punjab requests Centre for direct sugar import

It requested the economic decision-making body to allow Trading Corporation of Pakistan (TCP) to import 200,000 metric tons of sugar for strategic reserves out of the already approved import of 500,000 metric tons in the summary. It also sought approval of all applicable PPRA exemptions.

Secondly, it pleaded the ECC to bind Utility Stores Corporation (USC) to purchase the sugar from TCP to hold strategic reserves either at its TCP warehouses (godowns) or, if required, at private warehouses.

These warehouses will be selected in line with PPRA rules and following cost comparison with the TCP warehouses.

It said that sugar would arrive in consignments of 25,000-50,000 metric tons with a time lag of 7-15 days between the consignments, hence, storage needs may actually be less than anticipated this time around.

The industries ministry sought approval for allocating funds amounting to Rs18 billion for the import and storage of sugar for three months approximately calculated on the basis of landed cost per metric ton of the last tender floated by the TCP and warehousing cost done by the TCP.

It pleaded the ECC that the Finance Division should arrange foreign exchange of $110 million for the import of 200,000 metric tons of sugar.

During the ensuing discussion, the Ministry of Industries and Production informed the economic decision-making body that comments of the relevant stakeholders could not be solicited due to paucity of time. However, due to the matter being of urgent nature, the comments may be invited during the meeting.

The Ministry of National Food Security and Research did not raise any objection. The Finance Division conveyed its concurrence to the proposal in the meeting.

However, the economic policymakers noted that the representation of Commerce Division was not there. Due to the importance of the issue, the ECC chairman observed that maintenance of strategic reserves of sugar was of extreme importance as it was a basic necessity for the common man.

Moreover, this measure shall lead to price stabilisation and avert possible shortages in the country.

The ECC of the cabinet considered the summary submitted by the Ministry of Industries and Production titled “Import of Sugar for Strategic Reserves” and approved the proposal at para-6 of the summary with the modification that the Finance Division shall either provide the amount required for the import of 200,000 metric tons of sugar through a supplementary grant or through some other financial arrangement. The Ministry of Industries and Production may consult the Finance Division in this regard.

Published in The Express Tribune, July 27th, 2021.

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