With the inquiry report on sugar price hike has landed the next challenge for PM Imran Khan; taking action against those benefitting from the sugar exports and price hike saga. Imran Khan while taking credit of making the investigation report public as it is, has promised to take the culprits to task based on the forensic report; expected by April 25, 2020. However, meanwhile ouster of Jahangir Tareen Khan and reshuffling of few ministerial portfolios has already created quite a stir in polity and storm in the media.
The report identified how the decision of export permission was mysteriously pushed and inconsistent crop and stocks data was presented to facilitate the permission. The report mentioned bigwigs of the sugar industry who benefitted from export subsidy and price hike including Jahangir Tareen, Moonis Elahi and many other familiar industry names. The report has offered a unique opportunity of blame game for the opposition parties.
Opposition leader Shahbaz Sharif was quick to demand that PM should take action against those mentioned in the report without waiting for the forensic report. However, another spokesperson from PMLN denied any benefit derived by Salman Shahbaz but kept insisting that the report is absolutely correct for naming everybody else!
Not too long ago, the media and the nation heard how Omni Group was showered with financial windfalls; allegedly operating under the auspices of ex President Asif Ali Zardari. Despite this being alive in recent memory of the people, the Spokesperson of PPP had a loaded press conference the other day blaming the government of not taking immediate action against those named in the investigation report "who happen to be the closest aides of the PM".
Far from the usual political blame game, the fact remains that sugar industry in Pakistan has always been a privileged business thriving under mysterious conflict of interest. Political clout and access to power corridors that had always been a natural credential to become "one of them"; the elite club of the sugar industry.
The centrality of sugar industry in the value chain of sugar cane crop is very unique and a natural fit for most of the political constituencies across Punjab, Sindh and KPK. The rise of sugar industry since last three decades or so has some strange nexus with the rise of some influential political families wheeling and dealing in sugar.
As per some industry reports, the country's sugar industry, the second largest agro-based sector after textiles, grew rapidly under political patronage and protection through tariff and non-tariff restrictions on imports and generous subsidies from 41 mills in 1987 to 91 by the mid-2000s before a ban was placed on the establishment of new factories because of excess installed capacity.
The Sharifs are said to be among the first few political families to venture aggressively into the sugar market in the 1980s and 1990s.However, the Sharifs are not the only political family with high stakes in the country's sugar industry. Others like former president Asif Ali Zardari and his friend-turned-rival Dr Zulfiqar Mirza own sugar factories in Sindh. And so has been the case with KPK as well. Other politicians who own or have owned sugar mills in Punjab include the Chaudhrys of Gujrat, Jahangir Tareen, Zaka Ashraf, Nasrullah Dreshak, Humanyun Akhtar Khan, Makhdoom Ahmed Mahmood, Anwar Cheema, Mian Mohammad Azhar, Khusro Bakhtiar and Chaudry Munir.
PM has criticised Competition Commission of Pakistan (CCP) for not taking timely measures to stop the hoarding of sugar stocks and price hike. CCP has clarified its position that it intervened and imposed fines up to Rs 70 million. However, the fact remains that sugar industry has enormous clout in power and policy making corridors to circumvent the impact of CCP's intervention and has amply demonstrated its might many times.
Here is a blunt opinion from old files of one of the past and founding Chairman of CCP about "The fundamental issues". "The government interference in the sugar market, and for that matter in any other market, creates rent for both factory owners and growers [which] is a major reason for the quick expansion in the manufacturing capacity in Punjab and Sindh," argued Khalid Mirza during a press interview who headed the Competition Commission of Pakistan in the 2000s.
Mirza also pointed out that "such alliances represent conflict of interests and are opposed to public good. Someone holding a public office cannot be expected to ignore his business interests and make decisions for the larger good. This kind of association normally leads to formation of cartels in the economy, creates rent and distorts the markets through patronage".
Precisely, that is the problem with not so sweet sugar industry; a systemic, persistent and thriving conflict of interest by the political elite of yesteryears as well of today. PM Imran Khan faces a formidable challenge to dismantlethis systemic and widespread conflict of interest. Some dismissals from cabinet or even possibly initiating few criminal proceeding against them if forensic report and political compulsion so demands would certainly have some political soothing for the time being. But the real issue at hand is "the conflict of interest" that needs a bipartisan and carefully crafted long term structural intervention to let the free market mechanism hold footing for the common good of investors, growers and consumers.
(The writer is a political economist, an Urdu columnist and a writer. E mail: khalidmrasool@gmail.com)