Plan to import raw sugar scrapped

The government has scrapped its plan to import raw sugar approved by the federal cabinet on November 4, 2009, after detailed deliberations with the Finance Minister, Shaukat Tarin, reliable sources in Industries Ministry revealed to Business Recorder.
The sources said, in a recent meeting of Sugar Advisory Board (SAB) held under the chairmanship of Minister for Industries Mian Manzoor Ahmad Wattoo, it was decided that the government will import 500,000 MT raw sugar and 500,000 MT white sugar to meet shortage during the next sugar season 2009-10.
The meeting also decided that the TCP, a subsidiary of Commerce Ministry, would import raw and white sugar whereas raw sugar will be delivered to sugar mills for processing/refining. "In case TCP imports raw sugar and delivers it to sugar mills for converting it into white sugar, minimum delivery time from the date of issuance of advertisement in the press for inviting bids (as per PPRA Rules) will take 13-14 weeks.
If the TCP invites bids by issuing an advertisement in the press in the last week of November, then delivery to mills will be in the 4th week of February, 2010, which will be the end of crushing season. Raw sugar can only be converted into white sugar during cane crushing season. Therefore, it will not be possible for the mills to convert all imported raw sugar into white as it will be delivered at the end of crushing season", the sources quoted, Chairman TCP as writing to the Industries Minister a couple of days ago.
The sources said, comparative cost analysis between raw and white sugar shows that it will be costlier to import raw sugar and convert it into white by Pakistani sugar mills in comparison to the cost of imported white/refined sugar. In international market the difference between price of white sugar and raw sugar is about $60-65 PMT whereas the difference between the cost of the imported white and the estimated cost of converting to white sugar is $127/ PMT (if the customs duty and FED is waived by the government). The calculation is based on the international prices of raw and white sugar as on 15th November, 2009. It is clear from this cost comparison that import of raw sugar and converting it into white sugar in the local sugar mills will be costlier in comparison to the import of white/ refined sugar.
It is also pertinent to mention here that sugar mills differ greatly in terms of operational performance and are largely inefficient, not strategically located at sea ports and are not specialised in the conversion of raw sugar into refined/ white sugar.
Raw sugar itself is "unfit for human consumption" and as per Pakistani standard for raw sugar prescribed by PSQCA, only raw sugar of minimum 2000 icumsa can be imported vis-à-vis maximum 80 icumsa for white sugar. This will entail higher conversion cost to comply with current PSQCA conversion standard. It may also be pointed out that specifications of other countries which import raw sugar are around 800-1000 icumsa. According to sources, the issue of import of raw sugar by TCP was discussed in detail with Minister of Finance in his camp office in Karachi on November 14, 2009.
After detailed discussion it was decided that:
(i) raw sugar may not be imported;(ii) in case raw sugar is to be imported, private sector, sugar mills owners and commercial/ industrial users of sugar may be allowed to import. GoP may facilitate by abolishing customs duty/FED.
(ii) Finance Minister also decided that TCP would be directed to import white/crystal sugar. The import will be planned in a manner that the entire quantity is in the country by June 2010. The Ministry of Ports and Shipping will be asked to direct Karachi Port and Bin Qasim Port to allocate priority berthing to avoid demurrage because of large number of vessels arriving at Karachi Port.
(iii) The sources said, Industries Ministry would direct Pakistan Sugar Mills Association (PSMA) to import raw sugar.
(iv) This proposal is unlikely to be implemented, as sugar millers are not ready to import raw sugar at expensive rates and sell the sugar at rates announced by the government, commented one of the mill owners. This leads to the conclusion that the government has to rely on refined sugar import.