Federal government is once again flexing its muscles to start crackdown on sugar mills for selling the commodity at a much higher price than is justified by their cost of production, well-informed sources in the Industries Ministry told Business Recorder.
These thoughts were voiced during an inter-ministerial meeting on sugar situation presided over by Secretary Finance, Salman Siddique instead of Finance Minister Shaukat Tarin. "The meeting took strong exception to the continuous rising trend in sugar prices in the local market," the sources added. The meeting wondered whether the Supreme Court may take suo motu notice of this situation. Last year, when the government launched crackdown on sugar mills, sugar disappeared from the market.
"If there is no visible change in sugar millers' way of doing business, the government will intervene," the sources added. There is evidence to suggest that some sugar mill owners are smuggling their sugar to Afghanistan instead of releasing into the local market. According to the calculation presented before the meeting, cost of production for one kg of sugar is Rs 59 but mills are selling it at Rs 70. In response to a tender of Utility Stores Corporation (USC), local sugar mills had quoted Rs 59.20 per kg.
The meeting has also directed the Trading Corporation of Pakistan (TCP) to be ready to import more sugar, in addition to 0.5 million tons as the private sector can deceive the government during a crisis, the sources added. "The government will give incentives to the private sector importers as was promised recently, but at the same time we cannot trust them as they are 'liars,' commented another official. Private sector is unwilling to import white or raw sugar at a price that the government may force upon them which is not viable.
The meeting further decided that efforts should be made to strike government to government deals on sugar including the one with the Philippines. The participants also deliberated in detail on the controversy of 'imported sugar specifications'. The meeting decided that the Ministry of Commerce will give a presentation to the Economic Co-ordination Committee (ECC) of the Cabinet on Tuesday (today).
"Any decision on specifications issue will be taken today positively as Secretary Ministry of Science and Technology has also been invited for this purpose," the sources added. The ECC in its previous meeting had directed the Commerce Ministry to explore the possibility of sugar import from world-wide sources.
For this purpose, the ministry was directed to approach the Ministry of Science and Technology for changes in the specifications for import of the commodity. However, the Ministry of Science and Technology, on January 22, 2010, turned down the Commerce Ministry's proposal after due process with the arguments that the standards had been set in consultations with all the stakeholders and was in accordance with CAC/Saarc standards.
Pakistan is expected to import 1.4 million tons of white sugar to meet its domestic demand excluding any reserve/buffer stock. For this purpose, the government has waived off GST and Excise Duty on local as well as imported sugar for the private sector, the impact of which has been calculated at Rs 3 per kg. Trading Corporation of Pakistan (TCP) has issued six tenders and is expecting to get the 500,000 tons of white sugar imported by March 31.
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