50,000 metric tonnes of sugar bought for USC at high price

ISLAMABAD: Secretary Industries Arif Azeem has said around 50,000 metric ton sugar has been purchased for Utility Stores Corporation (USC) for Ramzan from Chaudhry Sugar Mills, owned by the ruling family, and three mills owned by Jahangir Tareen.
The purchase was made at a price which is more than market rate, he admits, but at the same time maintains that tendering process was transparent and everything was done following due process. Azeem stated that excessive price was paid because of prevailing corrupt practices in market economy, nonpayment of taxes by ordinary market players and undocumented business.
However, top officers of USC and Ministry of Industries raise questions over purchase of sugar for a government entity where it will be sold on subsidized rates. Officials say that per month sugar requirement of USC is 15,000 metric ton while USC already has 17,000 metric ton in stock. In Ramzan, this requirement is usually increased from 20,000 to 25,000 metric ton. Officials add that few weeks back, federal government decided to purchase 50,000 metric ton sugar for USC and approvals were taken from Finance Ministry as well as ECC. They say tender was moved and letters were written to all sugar mills asking them to submit their offers and subsequently bids were opened on May13, 2015. However, some problems emerged and MD USC Dr Mukhtar was sent on ‘sick leave’ on May 18, 2015 ahead of this around Rs3 billion deal. While on leave, he continued to visit ministry offices personally driving his car to return some file etc. DG (sugar) was also changed.
At this stage, Secretary Industries Arif Azeem assumed the charge of office of MD USC and awarded tender to five mills which include Chaudhry Sugar Mills (Previously owned by Prime Minister Nawaz Sharif but now it is owned by other members of Sharif family). Government officials stated that this sugar mills is not owned by PM now. JDW Sugar Mills, Daharki Sugar Mills (owned by Jahangir Tareen), Alliance Sugar Mills, Indus Sugar Mill were also given orders.
Sources say the mills will initially provide some 35,000 metric ton sugar. The government agreed to buy sugar at the rate of Rs58.50 per kg from these sugar mills whereas the ex-mill price on May 13, 2015 was Rs55.50 per kg. In addition to this, USC has to spend another Rs3.50 per kg for lifting, transportation, packing etc. This sugar is then sold out on USC outlets across the country on subsidised rates.
While talking to The News, Arif Azeem explained that letters were written to all sugar mills of the country asking them submit their offers for the given quantity. He added that those who submit their offers and agreed with the requirements were given the assignment. He said as every sugar mills was taken on board at the initiation of the process, so no question can be raised on the transparency of the process as we just moved ahead with lowest bidders. He explained that many corrupt practices prevail in our economic system and ex-mill price is set by mill owners and market players who never pay sales tax or any other kind of taxes whereas the USC, being a government entity, has to pay all the taxes and thus its purchase rate is always a bit higher than normal market rates.
Present MD USC Sultan Mehmood, who was suspended by the present federal minister for industries in January 2014 on charges of approving a wrong investment, while talking to The News said that neither he was member of tender committee nor had he approved this tender. Mehmood maintained that removing Dr Mukhtar, former MD USC, five days after opening of bids and his appointment after completion of bidding process was a government decision and he couldn’t comment on that.
However, federal secretary Arif Azeem maintained that Dr Mukhtar was not removed from his position and in fact he had applied for sick leave. Senior USC and ministry officials say that sugar hardly constitute 3% of a common persons kitchen budget and government should have focused on other staple food and necessary kitchen items for subsidy like flour, ghee, oil, vegetables, rice, pulses.
The officials say that it is completely incomprehensible that sugar is always considered as most important commodity for the poor and common people and only its availability is ensured in any case. The officers say that when money is on the table, there is no fight between government and opposition.