The Economic Co-ordination Committee (ECC) of the Cabinet has shelved sugar procurement plan after the Pakistan Sugar Mills Association (PSMA) preferred to remain away from the sugar purchase tender tailored in violation of Competition Commission of Pakistan''s (CCP) rules, sources in the Ministry of Industries told Business Recorder.
"The ECC has rescinded its earlier decision for procurement of sugar by the TCP from PSMA mills," sources said. This decision has been taken by the ECC at a time when prices of sugar are showing inclining trends due to hoarding and profiteering.
According to official documents available with Business Recorder, the ECC was informed on July 20, 2011 that the provincial governments have not raised sugar demand, except Punjab, but rejected the demand saying that the provincial government has sufficient stocks.
Contrary to these documents, TCP on Sunday gave a very strange clarification saying that it has neither received request from any province nor any instruction for the delivery of sugar to any province including Punjab. TCP can deliver the sugar only when directed by the Government.
The Ministry of Industries, which deals with sugar, is being run by Punjab government''s key opponent Pervaiz Elahi, whose son Moonis Elahi is facing embezzlement charges in NICL land scam.
On Saturday, Punjab Chief Minister Shahbaz Sharif warned the federal government against not allocating 15,000 tons sugar for Ramazan, and threatened to pick up sugar directly from the mills if the Prime Minister failed to resolve the issue.
Official documents obtained from the Ministry of Industries show that the Ministry had informed the ECC that subsequent to its permission, TCP tendered for procurement of sugar from local mills but no response was received as the market price had surpassed the upper limit of sugar price of Rs 60 per kg approved by the committee.
It further informed the ECC that sugar prices were rising mainly because of hoarding, for which provincial governments have been asked to check hoarding/profiteering.
The Ministry of Industries confirmed to the ECC that total production of sugar during 2010-11 was Rs 4.17 million tons, out of which 1.85 million tons is in stock which would be sufficient till December, 2011, keeping in view monthly consumption of 350,000 tons.
Additionally, TCP has stocks of 0.3 million tons for supply to the Utility Stores Corporation (USC), Army/Navy Canteen Store Departments for their monthly requirement of 40,000-50,000 tons, and additional quantities for Ramazan. However, when these stocks are exhausted, no strategic reserve would be available unless USC and other procure sugar on their own or through TCP. The private sector, during the year 2010-11, imported 134,582 tons of sugar to meet the gap between consumption and production.
A suggestion was made that the provincial governments should be allocated sugar as ''Ramazan package'' to be sold on the pattern of last year''s intervention. It was clarified that the quota allocated last year to the provincial governments was not fully utilised and, on the directions of ECC, the unutilised balance was discontinued. It was further clarified that the provinces had not raised demand, except Punjab. However, sufficient stocks of sugar are available with Punjab government. Therefore, no allocation is required. The ECC, was, nevertheless, assured that there would be no shortage of sugar till the end of current year.
Responding to rumours circulating in the media, wrongly propagating that the stocks of sugar in the country are depleting because of smuggling of sugar to Afghanistan through its western borders, the Ministry of Industries clarified that demand and supply of sugar is in equilibrium. Sufficient stocks of sugar are available in the country and there is no shortage of sugar. Demand of sugar is price-elastic ie demand decreases with the increase in price, and vice versa. Trend analysis shows that sugar consumption in Pakistan for the last 3 years averages around 3.8 million tons annually, while strategic reserve of 0.5 million tons is kept in accordance with National Sugar Policy 2009-10, thus totalling the requirement to 4.3 million tons annually.
Sugar stocks with TCP stand at 0.305 million tons, whereas sugar production for the year 2010-11 stands at 4.17 million tons, based on reports of TCP and Provincial Cane Commissioners. And, at present, total 1.83 million tons of sugar is in stock, which is sufficient till December 25, 2011.
As per report of International Sugar Organisation, sugar consumption in Afghanistan stands at 235,000 tons annually. Afghanistan imports sugar from India, China and Brazil. So, even in the eventuality of sugar being smuggled to Afghanistan, it is not significant enough to have impact on the sugar stocks.
Provincial governments have been asked to check hoarding and profiteering, while the Ministry of Interior has been asked to check smuggling on the western borders.
When contacted, Chairman of PSMA, Javed Kayani, assured that there would be adequate supply in Ramazan, and prices would remain at a reasonable level, and that there is no shortage of sugar in the country.
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