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ECC allows duty-free import of raw sugar

sugar ISLAMABAD: With the price of sugar having shot up to a record Rs85 per kg, the Economic Coordination Committee (ECC) of the cabinet on Tuesday allowed duty-free import of raw sugar and decided to auction official stocks to meet shortage and ease prices.

The import of raw sugar has been allowed at a time when the price of refined sugar has increased by 18 per cent in the international market and touched the highest level since 1987. Finance Secretary Salman Siddique told journalists that the committee had decided to abolish 25 per cent regulatory duty on import of raw sugar by private sector, including traders and sugar millers. The Trading Corporation of Pakistan (TCP) will have no role in the import.

The ECC meeting was presided over by Finance Minister Dr Abdul Hafeez Shaikh.

Mr Siddique said there would be no limit on the quantity of raw sugar import by the private sector which would be free to decide about the timing of imports, although a shortage of about 1.2 million tons of sugar has been anticipated for the year.

The provinces which had agreed before Ramazan to lift about 100,000 tons of refined sugar for subsidised sale at Rs56 per kg did not do so.

Only the Punjab government lifted 28,000 tons from the TCP and was interested in purchasing more but other provinces were not interested, said Mr Siddique.

As a result, the ECC asked the TCP to auction 50,000 tons of sugar to private sector within a week and then consider more auctions after meeting requirements of the Utility Stores Corporation. He said the USC had sought an increase in price for sale through its outlets to maintain a Rs10 per kg difference with the open market under an earlier decision of the ECC.

He kept quiet when asked it would not mean legalising the sugar price increase by private sector manipulations.


Mr Sakib Sherani, Principal Economic Adviser to the Ministry of Finance, said the ECC was informed that all the three price indexes were showing recharging of inflationary pressures as consumer price index (CPI) increased by 13.23 per cent in August, wholesale price index (WPI) by 19.2 per cent and sensitive price index (SPI) by 15.2 per cent on monthly basis when compared with last year.

A more worrying aspect was that the weekly SPI increased by 20.5 per cent on week ending September 16 against 14.6 per cent rate of increase in July this year. This was contributed by a 137 per cent increase in the price of onions, 35 per cent in that of potato and 3.75 per cent in the price of wheat flour.

Mr Sherani said the wheat stocks stood at about 10.1 million tons on September 16 against 8.67 million tons last year while sugar stocks remained at about 0.6 million tons this year against 1.1 million tons last year.


The ECC considered a proposal from the ministry of food for increasing the issue price of wheat and debated at length ramifications of emergence of about Rs400 billion worth of circular debt in commodity operations and its threat to national economy.

Mr Siddique said the meeting felt that the time had come to allow the private sector to play its role in wheat business after protecting buffer stocks and strategic reserves in the official domain. Therefore, the ECC constituted a committee headed by Deputy Chairman of Planning Commission Dr Nadeem ul Haque and comprising Minister for Ports and Shipping Babar Ghauri, Governor of State Bank and secretary of food and agriculture to prepare a policy for allowing the private sector to move into the wheat business.

The meeting also decided that after the 18th Amendment, the provinces should take their own decisions on how much stocks they should maintain keeping in mind their capacity to pay subsidies on flour. The committee also decided that the government-owned Passco should make an offer to provinces to lift wheat from its godowns at Rs975 per maund with an incentive to incur incidental and transportation costs on early lifting.

He said Passco should make an offer Rs176 per maund as incidental charges on wheat it had procured at Rs950 per maund. He said the banking receivables on account of wheat business stood at about Rs42 billion.


Mr Siddique said the committee considered a request of the industries ministry to increase by Rs50 per bag the sale price of 260,000 bags of Urea imported by the TCP for sale through National Fertiliser Corporation from Rs780 to Rs830 per 50 kg bag.

The ECC also considered a Rs21.35 billion subsidy package for farmers on seed and fertiliser in flood-affected areas to retrieve 70 per cent of the land affected by floods during the upcoming Rabi season. It decided that 260,000 bags of urea imported by the TCP be provided to farmers, but after working out a cost-sharing by the federal and provincial governments.

A committee headed by finance minister Shaikh and comprising provincial chief secretaries, officials of the ministry of food, Zarai Tariqiati Bank and the central bank would separately discuss the cost-sharing mechanism.

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