Finance Minister Syed Naveed Qamar is said to have got annoyed at the proposal put forth by Industries and Production Secretary Shahab Khawja to ban sugar procurement by Trading Corporation of Pakistan, well-placed sources told Business Recorder, here on Wednesday.
The ministry had submitted a summary to the Economic Co-ordination Committee (ECC) on July 12, proposing a ban on sugar procurement by TCP. There is a strong impression in the official circles that PSMA is using its political clout to delay some of the decisions that would have led to the government imposing a maximum sugar price and the withdrawal of the summary from the ECC approved agenda was indicative of their successful lobbying, the sources added.
"PSMA intends to stabilise sugar prices between Rs 34-36 per kg," the sources added. Industries ministry summary was put forward for the ECC agenda on July 15 in Lahore. The finance minister opposed the summary, arguing that no such decision had been taken by the secretaries' committee to bring sugar related measures to the notice of the ECC, the sources added.
Industries ministry had proposed a number of measures including imposition of regulatory duty on exports, ban on export of sugar, stoppage of procurement by TCP, bar on selling of sugar from stocks and duty-free import of raw sugar. "Why have you submitted the summary to the ECC without my permission as head of the committee," the sources quoted Qamar as saying.
Sugar importers' lobby was also very active after reports that there would be shortage of sugar next year because of smaller area under cultivation of sugarcane. One of the finance ministry officials had confirmed to this scribe a day before the ECC scheduled meeting that industries ministry would move a summary in the light of directions given to it by the secretaries' committee headed by the finance minister.
Industries Secretary had also conveyed to a two-member PSMA delegation comprising Sikandar Khan and K Ali Qazalbash that the government would allow duty-free import of raw sugar in case local sugar industry did not cooperate with the government to stabilise prices in the local market.
Industries Secretary Shahab Khawaja had given PSMA delegation limited time to respond to the government request before the ECC meeting but they did not pay any heed to their request, the sources added.
The government has confirmed reports that sugar mill owners procured sugarcane from the growers at a rate much lower than the rates approved by the government in the last crushing season and the payments were not made in time as well. In spite of these factors the government intervened and ordered TCP to procure up to 700,000 tons of sugar to enable mills owners to make payments to growers.
According to official documents, secretaries committee in its meeting on July 11 expressed concern over recent increasing trend in the price of sugar in spite of the fact that the present sugar stocks were sufficient enough to meet the local demand till November 2008.
PSMA, however, pointed out likely shortages due to smaller area under cultivation this year, which might put pressure on prices beyond November. The government believes that available stocks of 1.859 million tons would be sufficient to meet domestic requirements there were chances that PSMA would take advantage of this situation as it did in 2005. National Accountability Bureau had initiated an investigation of 2005 episode last year but at the then government had ordered the inquiry to be shelved.