ISLAMABAD: With the prices of sugar skyrocketing, the Council of Common Interests agreed on Monday to a proposal of the federal government to end the role of the Trading Corporation of Pakistan in import and supply of sugar, giving a free hand to millers and wholesalers to determine its price. The move, according to an official, was in compliance with an IMF condition to end subsidy on food items. This means the government will no longer provide subsidised sugar to consumers through utility stores or open market.
The third CCI meeting, presided over by Prime Minister Yousuf Raza Gilani and attended by the four chief ministers, approved a proposal made by the Economic Coordination Committee of the cabinet that the government should stop intervention in the market and end subsidy on sugar.
Meanwhile, the Utility Stores Corporation has increased prices of sugar by Rs10 to Rs65 a kg.
The USC chairman, Muhammad Arif Khan, said at a press conference on Monday that the government had increased the quota of sugar for the utility stores to 100,000 tons from 50,000 tons.
Sources told Dawn that the IMF had expressed concern over a 50 per cent reduction in GST rate of 16 per cent on sugar announced by the prime minister. It has been available on sugar since 2009, which led to a revenue loss of more than Rs9 billion in 2009-10.
Had the rate been 16 per cent, revenue collection from sugar would have been over Rs18 billion.
At the same time, the government has also kept a very minimal value of sugar at Rs28.88 as ex-factory price for assessment of GST since 2009, despite a massive increase in the retail price of sugar.
A statement issued by the Prime Minister’s Secretariat said that a committee comprising representatives from the four provinces would determine a mechanism for disposal of 100,000 tons of sugar at a landed price of Rs56 per kg plus taxes and other charges.
At present, the TCP had 350,000 tons of sugar which would be made available in the open market, the statement said.
Pakistan Sugar Mills Association chairman Javed Kiyani said at a press conference in Lahore that the price would come down by about 30 per cent to Rs70 per kg from the present Rs100 after the start of cane crushing.
The TCP chairman, Anjum Bashir, told Dawn that the corporation had already started offloading sugar in the open market on the instructions of the federal government. He said the TCP had disbursed 68,000 tons of sugar to the provinces and the remaining 32,000 tons would be disbursed soon.
Mr Bashir said the TCP had offloaded 28,000 tons in the open market since Oct 12, leaving a balance of only 12,000 tons. It offloaded 10,000 tons of sugar on Monday. A similar quantity would be released on Nov 10, 12 and 15, he added.
He said the TCP would still have a stock of 361,000 tons at the end of this month even after meeting all commitments to utility stores and the provinces. Senator Haroon Khan, who owns the biggest sugar mills, accused the government of not offloading the commodity in time. “There is no sugar in the market. It is obvious that the price will rise.” However, he said the sugar price should range between Rs82 and Rs86 per kg as per international price.
Mr Khan claimed that millers had disposed of all their stock at Rs70-75 a kg in the open market last month. The delay in offloading the bumper sugar stock lying with the TCP had led to the highest-ever price hike of Rs100 per kg, he added.
Commerce Minister Makhdoom Amin Fahim said in a statement that the TCP had an adequate quantity of sugar and it was offloading it in the market to offset the artificial shortage. He said the provinces should immediately lift their stock from the TCP to curb price hike.
Ahmad Fraz Khan adds from Lahore: PSMA chairman Javed Kiyani said that mills in Punjab would start crushing one week after Eidul Azha — around Nov 25 — and the price would start declining.
He also deflected the responsibility for the current price hike. “We have been urging the government since October to import sugar to meet the domestic requirement, but it did not listen to us,” he said, adding that even the Punjab government had requested the centre to import sugar.
“If mills get sugarcane at Rs200 per 40kg, the price of sugar will remain around Rs70 per kg. The government has, however, fixed support price of cane at Rs125 and also waived sales tax on sugar. The millers are not getting cane even at the announced price,” he added.
The PSMA chairman urged the government to withdraw sales tax and excise duty on sugar to bring down its price.
He claimed that millers had offloaded all their stocks in the market. “On Sept 30, millers had 270,000 tons and sold all of them in October.” The market was now completely dry, he added.
He contested a questioner who maintained that the PSMA had informed the industries and production ministry that it had 1.1 million tons of sugar by the end of September.