Punjab govt blames sugar price hike on LHC stay orders

LAHORE: The Punjab government on Tuesday blamed the stay orders issued by the Lahore High Court, which stopped the implementation of the sweetener’s notified price and prevented monitoring of the sugar supply chain, as one of the main reasons behind exploding price of sugar.

Caretaker Chief Minister Punjab Mohsin Naqvi chaired a meeting regarding sugar prices here. During the briefing, the food secretary mentioned that the Lahore High Court’s stay orders have prevented the acquisition of sugar mill records.

In response, the Punjab government has decided to promptly file an appeal to have the stay orders cancelled. The chief minister directed the Advocate General of Punjab to initiate this appeal urgently. He stressed the need for an immediate appeal to lift the stay orders and stabilize sugar prices.

The briefing also highlighted that due to these stay orders, sugar hoarders have enjoyed a free rein, leading to a substantial increase in sugar prices and causing hardship for the people.

According to an official brief dated September 5, 2023, the stay order issued on May 4, 2023 and August 15 2023 paved the way for the price escalation of sugar. The dates of stay orders were extended on one ground or another. The August 15 stay order prevented the provincial government from monitoring the sugar supply chain, which, according to the government, led to its smuggling to Afghanistan.

In the meanwhile, the sugar mills and the speculators were charging Rs180/kg against a very fair and notified retail price of around Rs.100/kg. Since May 4, 2023 till date, around 1.4 million metric tons of sugar have been sold by the sugar mills at an average of an additional Rs.40per kg. The sugar mills and the brokers/dealers/speculators have thus extorted Rs55 to 56 billion extra amount solely because of the stay orders, the brief states. The stay order against monitoring of the supply chain of sugar prevented the provincial authorities from checking the movement of sugar and its smuggling to Afghanistan, the Punjab government claimed.

It is recalled in the official brief that during this crushing season, a total of 7.730 million metric tons of sugar, including carry-over stocks were produced out of which 5. 32 million metric ton stocks were in the Punjab. The Punjab stocks were sufficient to cater for the needs of the ‘integrated region’ comprising the Punjab. ICT, partially KP, AJK and BG. Historically, Punjab caters for this region in this connection. On April 20, 2023, the Federal Ministry of National Food Security and Research (MNFS&R) notified an ex-mill price of 96.08/kg and a retail price of Rs99.33/kg for Punjab. However, this notification was suspended by the court on May 4, 2023 on the contention that the subject of price fixation was provincial, the government maintained. The next date of hearing has been fixed for September 20, 2023.

Taking a leeway from the judgment, the food department moved a summary for the provincial cabinet and powers of fixation of sugar were delegated to the Cane Commissioner Punjab by the Cabinet through the Punjab Foodstuffs (Sugar) Order, 2023. Subsequently, the Cane Commissioner started the process of determining of ex-mill sugar price. However, the LHC issued a stay order against price fixation on August 1, 2023. The case was fixed for today (Tuesday, September 5). However, the cane commissioner, who was present during the hearing, telephonically informed that the stay order had not been vacated and the case was referred to a division bench.

According to Punjab’s assessment in a fact finding report, around 0.7 million tonnes of sugar have been smuggled through western borders. Owing to various factors, the flow of this sugar could not be stopped. The sugar price is being increased at will by the stakeholders. They deserve the strictest possible action.

It was observed that smuggling has depleted the strategic reserves of sugar in the country and particularly in the Punjab. These reserves were meant for meeting the shortage of sugar in the coming year. There is 17 percent decrease in cultivation of standing sugarcane crop. Next year, Pakistan may have to spend considerable foreign exchange on import of sugar. This is a conspicuous writing on the wall.

The nexus of sugar millers and the brokers ( each mill has five to 6 brokers who further sell sugar to dealers in the country) is responsible for price escalation. Pakistan had enough of sugar this year. But keeping in view higher international prices, the sugar millers started smuggling sugar to Afghanistan.

Sugar price is escalated by the brokers through various WhatsApp groups. The sugar changes hands while lying in the mills and its price is skyrocketing like anything. Each new buyer adds up from Rs5 to 20 per kg. This process is supported by the sugar mills as their sugar too gets costlier without spending even a single penny, official brief finds.

The situation of sugar availability is aggravating day by day and it is apprehended that the price will further go up. In other provinces, there will be acute shortage of sugar and prices would be higher. There is urgent need to check this worsening situation.

Brief recommended steps to get he stay orders vacated at the earliest otherwise the crisis would deepen. Without notified price, the food department and the district administration cannot check hoarding or control prices.

The brief also recommended detaining the speculators/brokers, who have virtually played havoc with the sugar market, under MPO, which provides for such an action. Through our sources, detail of some speculators has been gathered and shared with brief. There are still many others. Intelligence agencies may be tasked to unearth such speculation rackets, the official fact finding report concluded.

Commenting on the Punjab government’s meeting and its outcome, a market observer said the government’s reservations about the stay orders may have some weight, but putting the entire blame on the stay orders is not fair. The stay orders did not restrain the district administration or border authorities to check sugar at places away from mills or its smuggling, he maintained.