They said that the issue of sugar was discussed by the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on January 12, 2010. It also decided that Trading Corporation of Pakistan (TCP) shall import 0.5 million tons of white sugar by the end of March 2010.
Official documents, obtained from Industries Ministry, suggest that the ECC in its meeting on November 4, 2009 had approved the National Sugar Policy. In the meeting of Secretaries committee, all aspects of the sugar policy were discussed, which included TCP''''s viewpoint that import of raw sugar and refining it into white sugar was no more a viable option for the government. This resulted in the submission of alternative options to Finance Minister who desired to bring the case before the ECC.
Industries Secretary reportedly tried to confuse the raw sugar import issue, but he was corrected by the Finance Minister, who said that the issue stood resolved. The ECC was also informed that during review of the sugar situation in the country in the ECC meeting held on December 15, 2009, the State Bank of Pakistan (SBP) was directed to facilitate import of 0.5 million tons of white sugar, instead of raw sugar, which as informed by TCP would start arriving in the country from February to June 2010.
It was further stated that the Utility Stores Corporation (USC) would intervene for low income groups and procure 0.5 million tons of sugar directly from the local market for which credit line of Rs 2.5 billion had been arranged by Ministry of Finance. Despite twice tendering by USC, there was no response to the first tender, while the rate of Rs 64.75/kg was quoted in the second tender, which could not be accepted as the price quoted was higher than the prevailing market rate, which ranged between Rs 50 and 60/kg.
Although the crushing season for 2009-10 is now in full swing, there is an increasing trend in the price of sugar for the reason that the sugarcane price is reported to be at an all time high ranging between Rs 130-160 per 40 kg and there is an upward trend in the international market.
The ECC was further informed that due to uncalled for conditionalities imposed by Ministry of Science and Technology, the scope of competition in response to tenders adversely impacted competition in response to tenders. It was also suggested that ECC should take a decision for fixing the strategic reserve of sugar by TCP.
The Ministry of Industries and Production proposed as follows: (i) TCP may be given clear-cut timeline to import the remaining 0.5 million tons of white sugar well before the end of present crushing season in April, 2010 as this will help curb the speculation and hoarding trend in the market, including the alleged forward selling of sugar; (ii) To build up the strategic reserves of 0.5 million tons of white sugar, TCP may be clearly directed to work out the time bound strategy keeping in view the international market situation of sugar; (iii) USC is facing difficulty in procuring sugar from the local market; therefore, the TCP may be directed to continue supply of 36,000 tons per month for regular sale through the USC outlets, till the procurement of sugar by USC from the local market; and (iv) To induct the private sector in the procurement of sugar the Ministerial Committee set up by the Cabinet may consider the possible incentives by holding a meeting with the private sector/traders/stockiest. This will ensure additional supply of sugar in the market.
Sources said that private sector at a meeting in Finance Ministry on Tuesday expressed inability to import sugar and sell it in the market until the federal government guaranteed ''''intervention-free'''' atmosphere--which has been a longstanding demand of sugar mill owners. The meeting was presided over by Finance Secretary Salman Siddique.
The Association was also of the view that per kilogram cost of production of sugar is Rs 68-69 and if the government pressed them to sell it at Rs 60, then this business is not acceptable to the mill owners. Sources said that the meeting also discussed measures to stop sugar smuggling to Afghanistan as 80,000 tons of sugar has been transported to Afghanistan so far, the cost of which is $60 million.