Ministry opposes sugar stock audit
The ECC noted that exports would not only solve the liquidity problem of sugar mills, but they would also fetch foreign exchange for the country. PHOTO: FILE
The Ministry of National Food Security and Research wants the Prime Minister’s Office to withdraw the decision on hiring of an audit firm for verifying stocks of sugar at mills across the country.
Sources told The Express Tribune that the PM Office had decided that an audit firm would be hired to assess the unsold stocks before permitting export of the sweetener.
The food security ministry informed the Economic Coordination Committee (ECC), in a recent meeting, that the Sugar Advisory Board (SAB) met on December 14, 2022 under the chairmanship of food security minister where it reviewed the sugar stock and sugarcane production data provided by provinces, Pakistan Sugar Mills Association (PSMA) and the Federal Board of Revenue (FBR).
The data covered sugar stocks of financial year 2021-22, sugarcane and sugar production estimates for 2022-23 season and the estimated annual sugar consumption.
During the meeting, the sugarcane crushing status in each province and recommendations of Punjab and Sindh governments for sugar export also came up for discussion.
The food security ministry pointed out that the PM Office had earlier given directives for hiring a reputable audit firm to swiftly examine the sugar stocks available with mills. The ministry was also advised to explore the option of engaging the company on a “pro bono basis”.
In compliance with the directives, the ministry contacted the Big Four audit firms but received no positive response. Thereafter, it gave advertisements in national dailies on December 9, 2022 for hiring an audit firm according to the Public Procurement Regulatory Authority (PPRA) rules.
In its meeting, SAB agreed that the PM Office would be approached with a request to review its decision on hiring an audit firm as the process would take considerable time.
It called for relying on the data and information provided by the FBR, as decided in an earlier meeting. Consequently, the food security ministry requested the PM Office to review its decision.
SAB recommended the ECC to allow export of up to 100,000 tons of sugar, adding that quota could be given to the PSMA for further distribution to the millers (only tax return filers) and the situation would be reviewed every fortnight.
It agreed that the PSMA would ensure that the sugar price did not increase in the domestic market from Rs85-90 per kg (ex-mill) for the 2021-22 stock. In case of price increase, SAB would recommend the ECC to discontinue exports immediately.
No subsidy would be provided to exporters by the federal and provincial governments while the PSMA and cane commissioners would ensure timely payments to growers, it recommended.
The food security ministry proposed that in view of SAB’s recommendations, the ECC may allow sugar export up to 100,000 tons, subject to the concurrence of Ministries of Industries and Production, Commerce and Finance.
The ECC held threadbare discussions and observed that sufficient stocks of sugar were available to meet the consumer requirement. Keeping in view the current situation, it said, 100,000 tons could be exported in light of SAB’s recommendations.
It was noted that the proposed export would not only solve the liquidity problem of sugar mills, which would then be able to make payments to the sugarcane growers, but it would also fetch foreign exchange for the country.
The ECC observed that the proposal of further export could be considered, subject to the availability of surplus sugar in the first week of January 2023. For the purpose, SAB would review the stock position and come up with viable recommendations.
The ECC considered a summary submitted by the Ministry of National Food Security with the title “Export of sugar during the year 2022-23” and approved the proposal with modifications.
It agreed that Pakistan Bureau of Statistics (PBS) would provide information about sugar prices on a bi-weekly basis to the Ministry of National Food Security, which would then share it with the ECC for review.
Also, PSMA will ensure that the existing price of sugar does not go up in the domestic market from Rs85-90 per kg (ex-mill) by January 31, 2023.
It added that the PM Office would be approached to review its earlier decision on the hiring of an independent audit firm for the verification of reported sugar stocks in line with the FBR’s track and trace data as well as the data provided by the governments of Punjab and Sindh.
Published in The Express Tribune, December 20th, 2022.
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