Govt refuses subsidy on sugar export

Pakistan has refused to provide subsidies on the export of sugar to Tajikistan, as requested by the latter.

The government has allowed the export of 40,000 metric tonnes (MT) of sugar to Tajikistan, and Tajikistan was expecting a subsidy on this export.

However, sources said that Pakistan refused to grant subsidies in a recent meeting of the Economic Coordination Committee (ECC).

Additionally, the government had allowed the export of 0.1 million tonnes of sugar. Sources said that the government warned sugar millers that the export of sugar would be revoked if they did not pay dues to sugarcane growers.

Earlier, the government had given relaxation to millers in the case of sugar exports despite the fact that the millers had breached the benchmark of retail sugar prices and had not paid the growers.

In a recent meeting of the economic decision-making body, the Commerce Division explained that since this was a business-to-government (B2G) arrangement, the Trading Corporation of Pakistan (TCP) would facilitate the Industries and Production Division during negotiations with the Tajikistan government, but the lead role would have to be taken by the Industries and Production Division through the Pakistan Sugar Mills Association (PSMA).

The ECC directed that the Ministry of Industries and Production should lead the negotiations through the PSMA to negotiate offering preferential prices to the Tajikistan government on a best-effort basis, but the government of Pakistan would not provide any subsidy.

On the question of a subsidy on port charges, the chairman of the TCP clarified that the proposed export would be through a land route, so no port handling would be involved.

The Industries and Production Division briefed that the Ministry of Foreign Affairs (MOFA) had conveyed that during the last visit of the prime minister of Pakistan to Tajikistan, the prime minister of Tajikistan discussed the possibility of purchasing sugar from Pakistan with a discount on transportation. Afterwards, MOFA received a formal communication from the Tajik prime minister requesting the purchase of 40,000 tonnes of sugar at preferential prices.

Tajikistan also asked for financial assistance in the form of a subsidy for Karachi port usage fees related to the import of goods and products by the State Material Resources agency under the Government of Tajikistan.

The Industries and Production Division further briefed that, with a view to assessing the availability of surplus sugar for export to Tajikistan, a meeting of the Sugar Advisory Board (SAB) was convened on August 13, 2024. SAB reviewed the stock position provided by the Federal Board of Revenue (FBR), provincial cane commissioners, and the PSMA. It observed that after retaining 810,000 MT of sugar as opening stock for the next crushing season, sufficient stocks would remain available for the export of 40,000 MT of sugar to Tajikistan. Moreover, it was decided that the TCP might hold bilateral negotiations on price and other formalities for export with the Tajikistan side. However, the ministry would render all possible support during this process.

The Industries and Production Division proposed that the export of 40,000 MT of sugar to Tajikistan, as agreed between the two governments on bilateral trade arrangements, may be allowed on a business (PSMA) to government (the agency nominated by Tajikistan) basis.

It was further proposed that the TCP may be allowed to lead and coordinate the negotiations between the PSMA and the said agency, in addition to providing any facilitation in matters including port usage fees for exports of sugar from Pakistan to Tajikistan.

The ECC of the cabinet considered the summary submitted by the Industries and Production Division regarding the "Export of 40,000 MT of Sugar to Tajikistan" and approved the proposal, with the modification that the Ministry of Industries and Production will play a lead role, through the PSMA, in negotiations with the Government of Tajikistan. The TCP would facilitate the ministry, and if needed, after the negotiations, the matter would be submitted before the ECC by the Ministry of Industries and Production.

The ECC further directed that the government would not provide any kind of subsidy in this deal and noted that since the proposed export was expected to take place through a land route, no port charges would be involved.

During the discussion on the export of 0.1 million tonnes of sugar, the Ministry of Industries and Production assured the ECC that sufficient sugar stocks were available until the start of the new crushing season. Therefore, the proposal to export 0.1 MMT of sugar was a safe and secure option.