The Federal Board of Revenue is said to have favoured sugar mills of Sindh zone in a Statutory Regulatory Order (SRO) under the guise of a decision taken by the Economic Co-ordination Committee (ECC) of the Cabinet last month. Official documents reveal that Finance Minister Abdul Hafeez Shaikh in a recent meeting of the ECC observed that a number of incentives have been granted to the sugar industry to facilitate it for exports. However, no feedback has been provided.
The ECC was informed that against the approved export of 1.2 million tons of sugar, applications for export of 670,000 tons have since been approved while actual shipment stood at 221,000 tons. The impact of reduction in Federal Excise Duty (FED) has been calculated at Rs 5 billion, most of which will now go only to sugar mills in Sindh. Both the Khyber Pakhtunkhawa and Punjab have strongly reacted to the SRO issued by the FBR on February 11, 2013.
Well-informed sources in Ministry of Industries told Business Recorder that the recently promulgated SRO to facilitate disposal of surplus sugar and to compete in the international market will only help Sindh zone mills because exports made through land route to Afghanistan and CIS countries have been excluded to the detriment of Punjab and KP.
According to sources Punjab produces 60 percent and KP 10 percent of overall sugar output in the country. The exclusion of both provinces has been strongly lamented by the industry as the SRO only favours one province. This SRO is being challenged in the court as discriminatory in nature and the major quantum of growers' payments relates to Punjab. If KP and Punjab mills try to export through Karachi port for destinations other than Afghanistan and CIS it costs over $20 dollars in terms of haulage and it is practically impossible to export.
The entire purpose of export facilitation is to support price of sugar in the local market as industry is not at a break even point given the current level of sugar prices and if there is no outlet for sale of Punjab and KP there will be a serious chaos in payments to sugarcane growers. The MoI, sources said, would take up the issue at the highest level to provide a level playing field to all the provinces.
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