Prices can show upward trend?: Commission to examine justification for sugar export

A seven-member Commission on sugar headed by Director General Federal Investigation Agency (FIA) Wajid Zia is reportedly investigating justification for sugar export, its potential beneficiaries and impact of subsidy on exports (if any), besides the role of Competition Commission of Pakistan (CCP).
The Federal government in exercise of all of the powers conferred by Section 3 of the Pakistan Commissions of Inquiry Act, 2017 constituted Inquiry Commission under Pakistan's Commissions of Inquiry Act, 2017 to probe into the increase in sugar prices.
Initially , the Commission was comprised of the following officers: (i) Wajid Zia, Director General FIA (Chairman);(ii) Gohar Nafees Director General, Anti-Corruption Establishment, Punjab( Member) ;(iii) Ahmad Kamal DDG, 18( Member);(iv) Bilal Rasool, Executive Director, SECP( Member);(v) Majid Hussain Chaudhry, Joint Director-SBP( Member); and (vi) Dr Bashirullah Khan, DG, Directorate General of Intelligence and Investigation, FBR, Islamabad (Member).
However, on March 17, 2020, Interior Division informed the Federal Cabinet that it had come to its notice that SBP has nominated a Joint Director (equivalent to BS-19) officer as Member of the Commission instead of BS-20/21 or equivalent officer which required modification of the earlier decision of March 10, 2020.
Interior Division solicited the approval of Cabinet to modify the summary in order to regularize the nomination of BS-19 officer of SBP as its representative in the Commission. The Cabinet approved the proposal of Interior Division with the direction that representative of Inter-Services Intelligence (ISI) be also included as Member in the Inquiry Commission. With the inclusion of ISI representative, the strength of Inquiry Commission reached seven Members.
The following are the Terms of Reference (ToRs) of the Inquiry Commission on sugar: (i) whether the production, this year, was low as compared to past years? Was low production the primary reason for increase in prices? ; (ii) Was the minimum support price sufficient? ; (iii) Did the mills purchase sugarcane at exorbitant higher prices than the minimum support price? If yes, then reasons thereof; (iv) reasons for mills not purchasing sugarcane for a limited period at a few weeks, from the farmers and its impact, if any, on sugar prices; (v) basis for determination of ex-mill price? Reasons for increase in ex-mill price; (vi) market manipulation/ cartelization by sugar mills, if any; (vii) impact of forward contracts on the prices of sugar and whether any malafide is involved ; (viii) whether margins between ex-mill and retail prices increased, compared to previous years, or otherwise. If yes, reasons thereof and potential beneficiaries; (ix) impact of tax increase on sugar prices at ex-mill/ retail level; (x) hoarding at wholesale/ retail level and within sugar mills vis-à-vis stocks of last year; (x) was export of sugar justified? Any subsidy given on export and its impact, with potential beneficiaries; (xi) basis for determination of retail price of sugar; (xii) role of various stakeholders, including government institutions and private sector in increase in sugar prices, including timely/ preventive/ preemptive remedial measures to control sugar prices and malafide, if any, of any stakeholder;(xiii) verification of the sale of sugar to find out malpractices of hoarding and manipulation of supply to the market to maximize profiteering; (xiv) physical verification of stock to find whether there is any excess/ shortage of stock as shown in the books and the verification of the genuineness of the sale record; (xv) the role of CCP in this crisis; (xvi) Benami transactions and profits (approximately) earned during the sugar crisis; and (xvii) any other issue, deemed appropriate, related to the increase in recent sugar prices.
The Commission has also been empowered under section 10(b) of the Act ibid to constitute special teams consisting of officers from executive authorities and experts in specific fields for the purposes of assisting the Commission in conducting inquiry. The special teams shall have such power as may be prescribed under this Act.
Sources in sugar industry told Business Recorder that Commission's teams are raiding different mills to get data and verify stocks.
In reply to question, the sources said, that sugar supply to the retail market is normal so far but if curfew is imposed then there will be difficulty in ensuring availability of commodity in the market.
When contacted, Chairman Pakistan Sugar Mills Association (PSMA), Aslam Farooque, confirmed that Inquiry Commission's team are visiting sugar mills to check their records. However, he stated that it appears that sugar is now not an essential item as the government has not yet reduced GST rate to lower its prices so far.
"If the government is serious in lowering the price of sugar, it should have reduced GST rates soon after the announcement of package for the poor," he added.
Market sources said in case of curfew and subsequent shortage of supply to the market, prices can show an upward trend in coming days.