ISLAMABAD: The federal cabinet has directed that Cabinet Committees strictly comply with its directions and that any difficulty, aberration or change in circumstances must be brought to the knowledge of the cabinet immediately by the conveners or chairpersons of these committees for further directions of the Cabinet.
These directions were issued on September 12, 2024, after a detailed discussion on Sugar Export Report prepared by a Cabinet Committee headed by the Minister for Petroleum and Natural Resources.
The Ministry of Industries and Production informed that the Economic Coordination Committee (ECC) of the Cabinet while considering its summary had approved export of 150,000 metric tons of sugar in its decision of June 13, 2024.
Export of unutilised sugar quota: Cabinet ties extension to grower payment
While ratifying this decision on June 25, 2024, the federal cabinet had constituted a Cabinet Committee on Monitoring of Sugar Exports with Minister for Petroleum as its Convener to review both the ex-mill and retail price of sugar with a focus on the following:
(i) ex-mill sugar price shall not increase beyond Rs140/kg; and
(ii) benchmark sugar retail price per kilogram will be taken from SPI as on June 13, 2024 with an additional margin of Rs2.00 (i.e.; Rs.145.15/kg).
It was apprised that the Cabinet Committee was further mandated that in case the ex-mill price of sugar rose beyond Rs140/kg or the retail price of sugar beyond the benchmark SPI price as on 13th June 2024 plus Rs2.00, it shall direct the Ministry of Industries and Production and Ministry of Commerce to stop the export of sugar, immediately.
Moreover, the Cabinet Committee was also asked to ensure that the entire export proceeds be utilised by sugar mills to clear overdue payments to growers and the provinces shall monitor the clearance of these payments under intimation to the Sugar Advisory Board.
It was further apprised that the Cabinet Committee held two meetings on July 29 and August 01, 2024, in which, the ex-mill and retail price of sugar, as well as, payments made to growers were discussed in detail and it was observed that while ex-mill price of sugar remained well below the benchmark price of Rs140/kg, its retail price had exceeded the benchmark price of Rs145.15/kg by Rs0.73/kg and Rs2.56/kg on July 11 and July 25, 2024, respectively.
Similarly, some sugar mills were reported not to have used their export proceeds for payment to growers. Considering this, during the second meeting, the Minister for Petroleum was of the view that the export quota shall be revoked.
The Minister for Industries and Production; however, did not agree with this proposition on the grounds that retail price was stable and instead of penalising the entire sugar industry for non-payment of growers’ dues, export quota of only those sugar mills that have failed to make payments to growers should be revoked. Nevertheless, it was agreed that a report in the matter will be submitted to Minister for Petroleum for his consideration and if required by him a case may be submitted to the Federal Cabinet for consideration.
The ministry added that a draft report was accordingly submitted to the Minster for Petroleum, Chair of the Cabinet Committee, on August 6, 2024, which was returned on August 15, 2024 with the recommendation to the Federal Cabinet that the export of sugar may be revoked immediately until all prescribed conditions were met.
The Cabinet was further informed that while the retail price of sugar had exceeded the benchmark of Rs145.15/Kg set by ECC by Rs0.73/Kg, Rs2.03/Kg and Rs2.56/Kg on July 11, 18 and 25, 2024, respectively, it had since then seen a downward trend. The retail price of sugar was reported as Rs143.79/kg and 143.09/kg on August 22 and 29, 2024, respectively, which was lower than the benchmark price set by ECC.
Moreover, ex-mill prices during the corresponding period remained well below the benchmark of Rs140/kg and reported at Rs132/kg on August 28, 2024. Further, the ECC had allowed export of sugar on advance payment basis.
As per the report of State Bank of Pakistan, while advance payment of $ 62.845 million had been received till August 23, 2024 against 103,853 metric tons of sugar approved for export by banks, the actual shipment was 75,056 metric tons only, leaving a balance of 28,797 metric tons, which indicated that there were still outstanding commitments of sugar exporters towards their foreign counterparts.
It was emphasised that the Cane Commissioner Punjab had allocated quota for sugar exports to the mills on July 1, 2024 with a forty-five days’ limit for completion of shipment, in the light of ECC decision of June 13, 2024. This limit expired on August 15, 2024. It was stated that export of sugar had hit a major snag by August 12, 2024 due to cross border firing and closing of Torkham Border by Afghan forces as reported by NLC.
For this reason, the ministry moved a summary to the ECC for a 15 days’ extension in the 45 days’ limit to permit the exporters to ship pending consignments and use their remaining export quota with the recommendation that the time extension shall not be allowed to the sugar mills that did not use export proceeds for payment of outstanding growers’ dues.
In the ensuing discussion, it was emphasised that Cabinet Committees must strictly comply with the directions of the Cabinet, which must not be deviated from, and that any difficulty, aberration or change in circumstances must be brought to the knowledge of the Cabinet immediately for further directions.
Copyright Business Recorder, 2024
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