The Economic Coordination Committee (ECC) of the Cabinet on Wednesday (today) is likely to allow import of 0.3 million tons of sugar through private sector sans taxes and duties besides imposing a ban on the remaining quota of sugar export. This proposal has been submitted after the government failed to control sugar prices in the country.

Sources close to the Prime Minister's Advisor on Commerce, Industries and Production, Abdul Razak Dawood told Business Recorder that in the latest Sugar Advisory Board (SAB) meeting held on January 28, 2020, it was noted that sugar stocks with sugar mills were of 1.719 million tons.

Traditionally, strategic reserves of sugar were maintained for two months - 0.916 million tons at 0.458 million tons per month. More than three months' stock of sugar is therefore available in the country.

Moreover, crushing is in process and will continue till March 2020; therefore, stock position of sugar will improve. Recently, as per provincial Cane Commissioners and the Pakistan Bureau of Statistics (PBS), ex-mill and national average retail prices showed a continuously increasing trend.

For instance, in Punjab, in one week, ex-mill price of sugar was increased from Rs 68 per kg to Rs 73.75 per kg without cogent reasons. As per information shared by provincial Cane Commissioners in the SAB meeting, ex-mill and retail prices of sugar should be Rs 68/kg and Rs 73/kg respectively.

On October 29, 2019, Ministry of Industries and Production wrote letters to provincial chief secretaries for controlling of hoarding and profiteering in their respective provinces.

Accordingly, the Government of Punjab fixed the retail price at Rs 70/kg utilising powers under Price Control and Prevention of Profiteering and Hoarding Act, 1977 in all its districts.

Moreover, during the current price hike Industries and Production Division again wrote a letter on January 28, 2020 to the provincial chief secretaries with the request to control sugar price in the country.

Industries and Production Division also wrote two letters to the Commerce Division regarding the stoppage of remaining export quota and import of 0.3 million tons of sugar without taxes and duties.

Since prices continue to show an unreasonable upward trend, following three options are available to reduce the prices of sugar in the country: (i) stop the remaining export quota of sugar, i.e., 0.350 million tons as requested by Industries and Production Division to Commerce Division; (ii) after the 18th Amendment in the Constitution, control of prices of essential commodities is a provincial subject. The Price Control and Prevention Profiteering and Hoarding Act 1977 is therefore implemented at sub-national level, which needs to be instructed accordingly; and (iii) Domestic price is Rs 79.06/kg whereas the international price sans sales tax is $403.90/ton, i.e., Rs 74.24/kg.

However, if the international prices increase to $425/ton, domestic prices without sales will be Rs 65.88 per kg and with sales tax at 17 per cent will be Rs 77.06 per kg.

With international price at $450/kg, price without the GST will be Rs 69.75 per kg, and with 10 per cent GST, it would be at Rs 81.61 per kg. MoI&P has recommended, the ECC to allow 0.3 million tons of white sugar through private sector without taxes and duties subject to the following conditions: (i) no financial support will be provided to importers by the federal/provincial governments; (ii) the import quota of 0.3 million tons will be implemented and monitored by the State Bank of Pakistan on first come, first served basis; and (iii) one importer can import sugar up to 75,000 tones.

Under the Rules of Business 1973, import and export of commodities are allocated to the Commerce Division, and Ministry of Industries and Production has already approached the Commerce Division to stop the remaining export quota and to import sugar without taxes and duties.

However, Advisor to the Prime Minister on Commerce, Industries and Production and Investment has indicated that he has consulted with the secretary Commerce Division, and has desired that the MoI&P should move a summary in this regard.