ECC rejects mills’ demand for more sugar export

Also turns down request for duty rebate on shipments to Kabul, Central Asia.

Zafar Bhutta February 20, 2014
The millers also asked the government to direct the TCP to purchase 500,000 tons from the sugar industry. PHOTO: FILE


The federal government has turned down the demand made by sugar millers for free export of the sweetener and rebate on federal excise duty (FED) along with inland freight subsidy on shipments to Afghanistan and Central Asian states via land route in the wake of pressure on the country’s foreign currency reserves.

The demand was rejected in a meeting of the Economic Coordination Committee (ECC) of the cabinet held on February 13, sources said.

During the deliberations, government officials suggested that surplus sugar stocks, expected to be around 667,000 tons in the 2013-14 season, should be kept in the country to meet any situation arising out of shortage and price hike.

The decision on more sugar export should be taken in September and October this year, when final figures of production and unsold stocks would be available, they said.

According to sources, the mill owners had pressed the government to allow export of one million tons of sugar without any, what they said, unnecessary conditions, suggesting the export policy should not be time-bound.

They also sought the same export incentives as offered in 2012-13 and FED rebate on exports to Afghanistan and Central Asian states as most of the shipments from Punjab and Khyber-Pakhtunkhwa went to these countries. Such exports are also entitled to the inland freight subsidy.

The millers also asked the government to direct the Trading Corporation of Pakistan (TCP) to purchase 500,000 tons from the sugar industry for keeping a buffer stock.

In the ECC meeting, the officials said the inland freight subsidy on export was agreed to in anticipation of disposal of surplus stocks by the sugar mills and in the wake of pressure on foreign exchange reserves. Subsequent arrangements for the 2013-14 crushing season could not be committed at this early stage, they said.

However, the situation could be reviewed at an appropriate time keeping in view the overall demand and supply as well as prices in the international market. The finance ministry opposed the sugar industry’s proposal that export policy should not be restricted for a certain time period.

Export quota

The ECC noted that the sugar mills holding previous export quota, which was allocated by the State Bank of Pakistan after the ECC permitted the shipments, had not been able to ship all the quantity notwithstanding the fact that exports were time-bound.

Moreover, no credible figures were available of stocks and expected production of the commodity. It also observed that the carrying cost of maintaining the proposed strategic buffer stock was “prohibitive”.

Published in The Express Tribune, February 21st, 2014.

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