The government has not yet decided to purchase sugar from local industry despite its decision to suspend international sugar import tenders by Trading Corporation of Pakistan (TCP), sources in Industries Ministry told Business Recorder.
They said that the Economic Coordination Committee (ECC) of the Cabinet in its meeting on May 19, 2009, had directed the State Bank of Pakistan (SBP) to expedite opening of Letters of Credit (LCs) for import of sugar. The ECC in its meeting on March 19, 2009 had decided to import 200,000 tons white sugar through TCP.
The reason behind these instructions was a complaint lodged by TCP Chairman Muhammad Saeed with the ECC that SBP was not cooperating in opening LCs, according to an official who attended the meeting.
"Issues relating to expeditious opening of LCs for sugar were also flagged. The ECC directed the SBP to look into this issue," so say the official documents. Sources said that the ECC also complained that TCP did not fulfil statuary requirements as laid down in Pakistan Standards and Quality Control Authority (PSQCA) Act 1996.
"Commerce Ministry has been directed to submit a detailed report in the next ECC meeting, and the Minister for Science and Technology should also be taken on board," sources added.
In the same meeting, the ECC decided to launch an operation against both the sugar mills and the stockists, as it had received concrete information of hoarding and cartelisation.
"Ministry of Industries and the provincial governments were directed to make serious efforts to regulate the supply of sugar in order to stabilise its price in the open market through effective checks on hoarding," sources said.
The ECC was apprised that sugar stocks available with Pakistan Sugar Mills Association (PSMA) were 2,213,140 tons, as on March 31, 2009, and 246,081 tons with Trading Corporation of Pakistan (TCP) as on May 13, 2009. Total sugar stocks in the country were reported at 2,459,221 tons. Taking stock of sugar situation, the ECC observed that sugar price in open market was still quite high and the main culprits behind it were stockists and 'cartels'.
Sugar prices at retail level range from Rs 47 in different parts of the country. "The State Bank and provincial governments have been asked to make serious efforts for rectification of the situation," sources added.
The SBP had already accused the sugar mills of hoarding, but PSMA categorically denied the allegation. The association said that because of the economic recession during past six months, average consumption of sugar has come down to 307,853 tons compared with the historical consumption of 350,000 tons. This reduction of 40,000 tons in sugar consumption cannot be termed as hoarding," said Iskandar Khan, in a letter to the State Bank of Pakistan (SBP).
SBP has set a deadline of July 31, 2009 for clearance of loans and advances taken against sugar stocks to discourage hoarding of sugar, but the PSMA is expected to resist this move.
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