The Economic Coordination Committee (ECC) of the Cabinet Tuesday approved the export of 1.5 MT of sugar with a subsidy of Rs 10.70 per kg with the condition to commence crushing from November 30, 2017. This approval is over and above 0.5 million tons sugar which SBP has already allocated to sugar mills.
A senior official told Business Recorder that the ECC presided over by Prime Minister Shahid Khaqan Abbasi, approved export of 1.5 million tons sugar on the same conditions of freight support as approved in ECC's meeting of September 14, 2017, ie Rs 10.70 per kg on sliding scale as per international sugar prices on 50:50 sharing basis by GoP and provincial governments. However the freight support shall not be available to the sugar mills which fail to start cane crushing by November 30, 2017 and those who do not pay for sugarcane procurement in time. Please highlight the last sentence prominently.
According to an official statement the ECC while taking into account the recommendations of the recent CCI meeting, the allowed export of 1.5MMT sugar in view of the availability of surplus sugar. The sources said, some mills in Punjab have started crushing but those in Sindh are blackmailing for more subsidy. Sindh government is supporting them by not announcing indicative sugarcane purchase price.
The sources further stated tat Chief Minister Sindh is under pressure to give Rs 4 kg subsidy over and above ECC approved freight support.
According to the summary presented to the ECC on the request of Pakistan Sugar Mills Association (PSMA), a meeting of the Sugar Advisory Board (SAB) was held in Ministry of Industries and Production (MoIP) on October 27, 2017 with Secretary MoIP in chair. The SAB observed that the production of sugar was 7.00 MMT and in the upcoming season it is expected to increase to 8.00 MMT and after deducting expected consumption of 5.100 MMT around 3.00 MMT sugar would be surplus. It was proposed that 1.5 MMT of sugar may be allowed for export.
In pursuance of the SAB meeting, a meeting, of the Inter-Ministerial Committee was held in the Ministry of Commerce on November 13, 2017.
After detailed deliberations, the following observations/recommendations for consideration of the ECC were unanimously agreed upon: (i) the national average price of sugar in the domestic market was Rs 53.89/kg which was much lower than the level of December 15, 2016 (Rs 62.61/kg)- the baseline price; ;(ii) the sugarcane crop is expected to be more than the targeted 68.5 MMT for 2017-18; (iii) the net availability of sugar from 2016-17 season works out to be 0.967 MMT, and with the expected new production of 8.0 MMT of sugar comes to 8.967 MMT for 2017-18. Therefore, allowing the export of One (1) MMT sugar would not affect the domestic availability and price;(iv) the export of additional 1 million tons of sugar may be recommended subject to the conditions already approved by the ECC.
On 24th, November 2017, in a meeting of Council of Common interests (CCI), it was proposed by the Ministry of Commerce to deregulate the purchase of Sugarcane by the provincial governments and in case any provincial government continues with such a policy, it may bear the cost of freight support, for exports in case of surplus sugar production. It was further proposed that the Federal government should limit its liability up to the current commitment.
Commerce Division has submitted the following recommendation to the ECC; (i) export of additional 01 MMT of sugar may be allowed subject to the conditions already approved by the ECC on September 14, 2017; (ii) no export quota shall be issued by SBP to any sugar mill that fails to verify that start of cane crushing latest by November 30, 2017 and continuation thereafter and timely payments for all the procurements of sugarcane as provided in the conditions of the notified approval of the ECC decision of September 14, 2017.
The Commerce Division also proposed that no sugar freight support be provided for exports by the Federal government after utilization of the provision of one million tons, being allowed here.
The ECC also permitted procurement of goods and services as per the provisions of the Framework Arrangement and Export-Import Bank of Korea Guidelines.
In order to discourage fuel adulteration and tax evasion, the ECC allowed addition of Fuel Marker in Superior Kerosene Oil (SKO).
The ECC also approved determination and notification of UCH-II Gas Price, as agreed under Gas Pricing Agreement (GPA) by Oil & Gas Regulatory Authority under the OGRA Ordinance, 2002.
The ECC accorded its approval for making necessary amendments in the ECC approved Supplemental Agreement to Implementation Agreement (SAIA) for CPEC projects.
The ECC also acceded to a proposal for levying of regulatory duty on import of LPG. The step would help maintaining parity with the locally produced LPG. The ECC also allowed disposal of 500,000 tons of surplus wheat of PASSCO through local sale.