The top economic decision making body on Monday failed to decide for the third time whether to purchase 200,000 tons of sugar from Pakistan Sugar Mills Association after reports revealed that the proposed deal could cause Rs1.8 billion loss to the exchequer as documents were amended to favour the influential barons.
“The Economic Coordination Committee (ECC) of the Cabinet has constituted a committee on proposal of purchase of 200,000 tons of sugar from the Pakistan Sugar Mills Association,” said the finance ministry after the ECC meeting on Monday.
It is the third committee constituted on the same issue. The first committee was constituted on October 13 that sanctioned to procure the commodity at Rs 63,000 per metric ton.
On December 1, the recommendation was tabled in the ECC meeting after a senior secretary revealed that the prevailing market rates were Rs 54,000 per metric ton, resulting into overpricing Rs1.8 billion. The ECC on December 1 constituted the second committee that was unable to resolve the issue.
It is also yet to be seen whether the ECC, headed by Finance Minister Dr Abdul Hafeez Shaikh, decides to procure sugar from the PSMA. According to the provisional order of the Competition Commission of Pakistan, the PSMA had made a three-tier cartel in the sugar industry. However, the CCP cannot make its order public as the PSMA has obtained a stay order from the Sindh High Court (SHC), which is present in the registrar’s office.
Violation of the anti-trust law makes the PSMA liable for a penalty of Rs75 million or 10 per cent of the annual turnover, whichever is higher.
The finance ministry handout stated that the new committee would look into the sugar situation in the country to ensure that there is no violation of the Public Procurement Regulatory Authority condition while finalising the lifting of sugar from the PSMA, and the role of TCP.
The October 13 committee had recommended to amend tender documents in favour of millers and also declared Kashmir Sugar Mills as bonafide bidder despite the fact that it had defaulted on 2008 sugar supplies and even withheld payments for two years. The Kashmir Sugar Mills even submitted the bid on plain paper, revealed official documents available with The Express Tribune.
According to the documents, out of 32 as many as 27 party bids were declared responsive while five were rejected including Kashmir Sugar Mill’s bid.
The finance ministry said that Dr Abdul Hafeez Shaikh was of the view that rest of the sugar mills who are not participating in the tender should also be invited to ensure level playing field for all.
Fertiliser import
The ECC after having detailed deliberations of the fertiliser urea situation and the supply of gas for its production took the decision of importing 200,000 tons of urea for the Rabi Crop 2011-12.
The ECC also constituted a committee on the proposal floated by the ministry of industries in its summary for the removal of 16 per cent sales tax on agriculture tractors. The committee headed by the Minister for Industries and comprising Secretaries Revenue, Finance, Industries and Adviser to the Prime Minister on Agriculture would submit its report to the chair before the next ECC meeting expected in the current week.
The Ministry of Industries pleaded that the price hike of tractors has made it difficult for farmers to purchase new tractors and convert traditional farming into mechanical farming for higher yield.
Furthermore, Zarai Taraqiati Bank Limited (ZTBL) has also not been extending loans for purchase of tractors since April 2010, creating another impediment for farmers. The production of tractors since March 2011 has drastically declined from over 72,000 units to around 20,000 units anually.
Published in The Express Tribune, December 13th, 2011.
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