Economic Co-ordination Committee's refusal to buy 200,000 tons of locally manufactured sugar worth Rs 8.4 billion has forced Pakistan Sugar Mills Association (PSMA) to export it to payoff loans and advances pending for a year. The decision was made after receiving directives from State Bank of Pakistan (SBP) to clear all pending dues by July 1, 2009.
A delegation of PSMA met Governor SBP Salim Raza and apprised him about their plight, Abdul Wajid chairman PSMA Sindh-Circle told Business Recorder on Friday. The association wrote letters to President Zardari, Ministry of Food and Agriculture (Minfa) and All Pakistan Farmers Association (APFA) and expressed its concerns over its unsold sugar stock and alleged rigid stance of the SBP with regard to repayment of loans but it has yet to receive response.
He said the decision was taken amid uncertain conditions faced by the industry when the country requires 400,000 tons of white refined sugar to overcome crisis. Instead of supporting the local industry, the government awarded contract to Trading Corporation of Pakistan (TCP) to import 200,000 tons of sugar by rejecting the proposal of PSMA to buy standard quality sugar at much cheaper rates, the chairman said.
Finally, PSMA wrote letter to the President and expressed its concern over the rapid sale of its stock to pay back SBP loans and advances, but the association was yet to receive any response from the Presidency, Wajid said. In a letter, PSMA said that if the stock commodity could not be sold, it would lead to no-payment to growers and cause delay in crushing season, he added.
The central bank also directed the millers to sanction their limits of sugar production before July 01, 2009. "But how it is possible to assume production targets before crushing season", he said, adding that the delegation could not convince the SBP authorities.
He was of the view that there is no shortage of sugar as the sugar stock held by the mills and TCP as on May 30, 2009 stood at 2,136,923 tons. Already, 400,000 tons sugar is in pipeline with wholesalers and retailers, according to Wajid.
He said: "if we consider average consumption of 325,000 against current consumption of 289,641 tons, the sugar stock in the mills and TCP, excluding sugar stock in the market, it would last for next crushing season easily."
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