Pakistan Sugar Mills Association (Punjab Zone) has urged the provincial government to extend Rs 22 billion loan to its members, enabling them to clear the outstanding dues of sugarcane farmers which, it fears, will be up to Rs 40 billion by the end of the current crushing season.
"The Punjab government should disburse an interest-free loan to the mills to be paid back in three to five years," association Chairman Javed Kiyani told a press conference on Thursday. "The government should also fix the sugar prices, the same way it did with those of the sugarcane, with suitable amount as overheads and a reasonable profit to enable the mills keep their wheel running and clear the payments."
He said, as the Punjab cane commissioner mentioned already, up to Rs 95 billion had already been cleared by the mills out of the total of Rs 110 billion though some mills were still crushing and despite the 80-percent clearance of the payment, outstanding against the mills by the end of the current crushing season would be up to Rs 40 billion.
He argued that the mills were neither seeking rebate nor assistance but they needed this money to clear the payments. "It is a well regulated industry where the government fixes the raw material prices, but the end product prices are fixed by the market on the supply-demand situation. If the mills buy sugarcane at Rs 180 billion, the sugar prices should have been fixed at Rs 60 per kilogramme. Yet, the government fixed its retail price at Rs 54 per kilogramme," he added.
He also urged the government to keep their cost of production in mind while fixing the sugar prices and that they had faced multifaceted issues, such as higher sugarcane cost as compared to Sindh and delay in payment of inland freight subsidy stuck, for the past two and half years, waiver of mills portion in road cess by the Sindh government, while its rates were also higher in Punjab and the of millers' harassment by the district administration to clear the outstanding amounts.
"Now, even the farmers have started demonstrating outside the mills for payment of their dues," he said.
The PSMA-Punjab leadership, present at the press conference, included Javed Kiyani, former chairman Riaz Qadeer Butt, Executive Committee Member Chaudhry Waheed. They said the Sindh government had paid Rs 12 per maund price to the sugarcane farmers in the province following a Sindh High Court decision. "So, the Punjab government should also follow suit and protect the farmers' interests," he demanded.
They said the Sindh High Court in a constitutional petition, with all stakeholders' consensus, fixed the sugarcane prices for the season 2014-15 at Rs 172 per 40 kg in Sindh, out of which the local government had undertaken to contribute Rs 12 per 40 kg for onward payment to farmers.
He said initially the sugarcane prices in Sindh were fixed at Rs 182 per 40 kg, but the Sindh High Court gave a relief of Rs 10 per maund, with the Sindh government also contributing Rs 12 per maund to the farmers' payment.
"Hence, the sugar mills in Sindh are now paying Rs 160 per maund to farmers. On the other hand the sugar mills in Punjab are paying Rs 180 per 40 kg to farmers in the province, while sugar from Sindh was also being dumped in Punjab causing further trouble for the millers.
"The Punjab government should also lower the sugarcane prices following the Sindh High Court order to safeguard the farmers' payments since the sugar industry is starved of enough and also because of it the payments are being delayed. If the government cannot lower the prices, it should extend an interest-free loan of Rs 22 billion to clear the dues."
He also demanded of the government to waive road cess of mills portion in line with the decision of the Sindh government.
About co-generation by the sugar mills, he claimed that two mills in south of the province had already started power generation while two more, including one in south and one in the central Punjab, would soon be joining the club. "But the government should extend finance to the mills to get them modernised and explore the true potential of co-generation which has been estimated up to 2,000-2,500 megawatts," he added.
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