The Ministry of Commerce is accused of manipulating the removal of 25 percent customs duty on imported raw sugar without taking the Ministry of Food and Agriculture (Minfa) into confidence. Raw sugar itself is unfit for human consumption and as per Pakistani standard for raw sugar, prescribed by the PSQCA, only raw sugar of a minimum 2,000 Icumsa can be imported, vis-à-vis maximum 80 icumsa, for white sugar.
Commerce Ministry, sources said, is planning to submit a summary to the Economic Co-ordination Committee (ECC) of the Cabinet for withdrawal of customs duty on the imported raw sugar. "We have advised the Commerce Ministry to first consult with Minfa which is protecting the interests of sugarcane growers," said a senior official of the Industries Ministry on condition of anonymity.
In December 2009, the ECC formally scrapped its plan to import 0.5 million tons of raw sugar through the Trading Corporation of Pakistan despite the fact that the Cabinet in November decided to import 500,000 tons of raw sugar and 500,000 tons of refined/white sugar through the TCP. Later on the import target was revised to 1.2 million tons. However, the TCP did not agree to import raw sugar as, according to the entity, its cumulative cost was found to be higher than that of the refined/white sugar.
It is unclear whether the commerce ministry has sent this proposal to the Ministry of Industries and Production for this season or the next season. Insiders in the commerce ministry told this scribe that a 'mafia' in the TCP is extending support to the 'spoilers' despite clear directives of the ECC that doubtful parties should not be allowed to enter the tendering process. However, recent developments in the TCP indicate that the spoilers once again are being given special treatment on verbal instructions from Islamabad.
According to official documents, the ECC was informed on May 3, 2010 that $125.181 million have been allocated/released to TCP for import of 200,000 (5 per cent - +) MT sugar during April. The finance ministry will provide necessary foreign exchange to TCP for import of sugar as and when required.
It was further reported that the finance ministry has issued a Letter of Comfort (LoC) for release of subsidy amounting to Rs 10 billion to TCP; as a result thereof a consortium of banks have agreed to provide additional funding up to Rs 15 billion against which the pending L/C for import of 250,000 MT sugar and 100,000 MT urea will be established by TCP.
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