Chairman National Assembly Standing Committee on Finance Asad Umer said on Thursday that the government has taken the initiative of taking up competition related issues of sugar sector after a long gap of 9-10 years. During the meeting of National Assembly Standing Committee on Finance held here on Thursday, Asad Umar said that the members can raise the issue of sugar sector before the National Assembly through a point of order. "I have talked about the issue before the budget and members should take up the issue before the National Assembly."
MNA Nafeesa Shah stated that the sugar is a sector where every political party leadership has business. The investigation of the sugar mills may not be possible because present government has its own ATMs which are sitting right and left of the Prime Minister, she said. Responding to Asad Umar, MNA Nafessa Shah said, "I will raise the issue before the National Assembly through a point of order."
In light of the recent increase in the prices of sugar and other essential commodities, the CCP was asked by the National Assembly Standing Committee on Finance and Revenue headed by Asad Umar, to give detailed presentations on the state of affairs in the sugar, wheat, cement, and other important sectors. Chairperson CCP Vadiyya Khalil, flanked by CCP Member Cartels and Trade Abuse Shaista Bano gave the presentations on sugar and wheat sectors. Due to the shortage of time, three other presentations could not take place.
The chairperson Competition Commission of Pakistan (CCP) briefed the committee about the reasons behind increase in price of wheat flour and sugar sector in the country. She said that Pakistan Flour Mills Association (PFMA) was engaged in fixing the prices of flour and provided its members a platform to exchange commercially sensitive information and strategic data on flour prices, which was prima facie violation of the section. She further informed the reasons for increase in wheat prices, which were related to increase in fertilizer prices by 16.7%, unavailability of canal water and irrigation flows in Quarter-2, Financial Year 2019 i.e. 6.3% lower than last five years.
The representatives of Nan Bai Association informed the committee that the price of each 40kg wheat flour bag has gone up from Rs 2,600 to Rs 3,600 and there is an increase of Rs 1000 in the price of both refined and processed wheat flour. She said that internationally prices of sugar are decreasing, but domestically its price is increasing which is an opposite phenomenon.
The Competition Commission of Pakistan (CCP) informed the committee that the CCP has started cost audit of sugar sector for the crop year 2016-17. Ministry of Industries and Production asked CCP to carry out the cost audit of sugar sector for the crop year 2016-17. The CCP is in the process of gathering information from the sugar mills in this regard.
She said that the CCP has taken numerous enforcement and advocacy actions to guard the consumers' interest and protect them from any anti-competitive activities in the sugar industry. Enumerating the CCP's actions in the sugar industry to safeguard the consumers' interest, the chairperson informed that in September 2009, CCP took suo moto notice of the newspaper articles reporting that Pakistan Sugar Mills Association (PSMA) asked its member to release 1.2 million tonnes sugar stock to retire State Bank of Pakistan loans. Subsequently search and inspection was conducted at PSMA offices in Lahore, Islamabad and Karachi.
The CCP's Enquiry report dated 21 October 2009 stated that PSMA and the sugar mills rather than competing in the open market preferred a closed and protected market which is managed collusively and collectively by PSMA. The PSMA apart from being in breach of its mandate appears to be acting in violation of Section 4(1) of the Competition Ordinance (Now Competition Act).
A show cause notice was issued to PSMA and member mills. PSMA and sugar mills obtained stay and case is pending adjudication. In August, 2009 the CCP issued a policy note to the federal government recommending it to terminate the agreement between the All Pakistan Sugar Mills Association (APSMA) and the Ministry of Industries and Production regarding fixing the ex-mill rate of sugar in Sindh and Punjab.
In October 2009 the Supreme Court of Pakistan constituted the then chairman CCP as one-man commission to investigate and report on sugar sector. In the report, the recommendations included an independent data verification rather than relaying only on PSMA; price of sugarcane should be based on sucrose content; technology available to ensure success of policy linking sugarcane price to sucrose content; market should be free; availability of sugar; and calculation of support price.
In January 2010, the CCP initiated an enquiry to verify whether the terms and conditions of the TCP tenders, floated to import 500000 MT of refined sugar, were preventing restricting or reducing competition in the relevant market in violation of the provisions of Section 3 and/or 4 of the Ordinance. Preliminary enquiry report concluded that certain clauses of the tender for procurement of sugar are restrictive and in prima facie violation of Section 4 of the Competition Act, 2010. The CCP issued the order in the matter and directed TCP to issue a corrigendum in terms of the above clauses in two newspapers of national circulation the following day positively and to take all necessary actions.
On advocacy front, the CCP conducted an open hearing of all stakeholders on 25th January 2018 and opinion was issued recommending to the government to abolish the price floor/support price of sugarcane and let the market determine the price based on supply and demand; quality considerations should determine any support price, rather than weight; the provincial governments to review the legislative framework for encouraging open competition in the sugar sector. To control price hikes, TCP should keep a minimum reserve of sugar and all relevant government departments should be cognisant of the sugar supply situation at all times.
Comments
Comments are closed.