The federal government has decided in principle to waive the 25 percent Regulatory Duty (RD) on import of raw sugar to plug in the expected shortage next year. However, the quantity of raw sugar import is yet to be finalised, well-informed sources told Business Recorder.
This was the crux of an inter-ministerial meeting held in the Ministry of Industries and Production (MoI&P) and attended by the Minister for Industries, Mir Hazar Khan Bijarani, Commerce Minister, Makhdoom Amin Fahim, Minister for Food and Agriculture (Minfa), Nazar Muhammad Gondal and Minister of State for Finance and Economic Affairs, Hina Rabbani Khar on Thursday.
"We have agreed in principle to allow raw sugar import by removing 25 percent RD, however, a sub committee comprising of five Secretaries will decide about the quantity, timing and modus operandi of import of raw sugar and facilitation of private sector for import of white sugar," said one of the officials who attended the meeting.
Pakistan Sugar Mills Association (PSMA) has urged the government to allow it to import 0.5 millions tons of raw sugar without RD, however, Secretary Industries, Abdul Ghaffar Somro, has emphasised the need to import one million MT of raw sugar to avert an imminent crisis next year.
The committee will submit its recommendations to the Ministers' Committee by September 25, 2010, which will meet on September 27 to finalise the sugar import plan. However, there are apprehensions in the official circles that powerful lobby of white sugar importers' may thwart the committee's recommendations with the argument that this plan will hurt the sugarcane growers.
"I fear that the reasoning (rationale for allowing import of raw sugar) may be defeated by lobbyists (heavy weights in the government) like in the past," the official further commented. The country is facing sugar crisis for the last three years because the policy makers have failed to take timely decisions. According to an official statement, the meeting was apprised of the domestic and imported sugar stocks position. The total domestic stocks stand at 0.4 million tons.
Chairman TCP revealed that contracts for import of 1.2 million tons have been awarded while LCs opened for import of about one million tons. As many as 995,000 MT of imported sugar has arrived while 417,875 MT is scheduled to arrive with 132,000 MT in September and 626,875MT in October and November. He informed that the stock domestic plus imported totalled at 1,136,167 MT, which would be sufficient till December 2010.
Cane Commissioner Minfa apprised the meeting of details of the post floods sugar cane crop position and explained that after taking the flood losses into account a gap of around 1.2 million tons equal to last year's gap was expected between production and consumption of sugar in 2010-11.
Before floods Minfa had estimated 54 million tons of sugarcane production of 3.4 million tons of refined sugar. After floods the estimate may fall to 3 million tons. However, with the floodwaters yet to recede in Sindh where 30 percent of the sugarcane crop is grown, these preliminary estimates may change after final figures of sugarcane output are released.
The ministerial committee underlined the need of strict implementation of the ban on export of sugar and gur, and checks on smuggling. Chairman Pakistan Sugar Mills Association (PSMA), sources said, reminded the participants that he had been writing to the government since 2007 recommending that the production demand gap needs to be filled, however, no one had heeded to his warnings yet.
Sugar market relies on speculation and as TCP has failed to import contracted sugar on time, the middleman has made money, he added. He also warned that prices would continue to rise until TCP releases imported sugar in the market.
Chairman PSMA further stated that if the government allows PSMA to import raw sugar, it will reach Karachi in February.
The sources said that Chairman TCP, Anjum Bashir, held the Finance Ministry responsible for sugar crisis, as the former is not releasing the required amount for opening of LC. "I opened tenders as per schedule. If Finance Ministry does not release the required funding for the purpose I am not responsible," sources quoted TCP Chairman as saying.
The representatives of PSMA argued that TCP imports sugar duty free whereas private sector pays duties, which implies their price is costlier than the government's. "When we sell sugar in the market at higher rates, government starts raiding our godowns," sources quoted Rana Ayub of sugar traders' body as saying.