Question mark over purchase of sugar above notified price

LAHORE: The Punjab government’s decision to sell sugar at Rs140 per kg at special bazaars in the province after buying it from mill owners in itself is a sheer contrast to the federal government’s calculated cost of Rs98.82 per kg, inclusive of profit and taxes. The Punjab government and a delegation of Pakistan Sugar Mills Association (PSMA) on Sunday decided to supply sugar at Rs140 per kg at special bazaars. The agreed price, however, will be nearly 42pc more than the rate assessed by the federal government for the current season.

The enforcement of the federal government’s notified price has been put on hold by the Lahore High Court for the past several months and the provincial government has recently filed an appeal against the stay order, meaning thereby it considered Rs98.82 per kg a justified retail price based on its fair value. Hence, the move to buy sweetener from sugar mill owners at Rs140 per kg may dilute the stance of the government in the litigation process, according to insiders. Another important upcoming hearing on sugar price fixing is due this week at the Supreme Court of Pakistan. In this connection, September 12 has been fixed by the Supreme Court for hearing the federal government’s plea challenging a stay order by the LHC over the enforcement of the notified sugar price.

Presently, sugar is being sold at utility stores at Rs101 per kg for targeted customers across the country and at Rs180 to Rs190 per kg in the open market in Punjab. Moreover, it was learnt that sugar mills may provide maximum 20,000 tons of sugar in the next couple of months on the agreed rate to the Punjab government, which is an insignificant volume if compared with monthly consumption of about 350,000 tons in the province. When contacted, provincial Minister for Industries and Agriculture S M Tanveer expressed disagreement with the notion of buying sugar from mills at a much higher price. When asked to comment on why the Punjab government was procuring sugar from mills owners at Rs140 per kg price, which is over 40 percent above the federal government’s assessed and notified price of Rs98.82 per kg, he opted not to comment.

An official said on condition of anonymity that buying sugar from mills at Rs140 per kg against the prevailing market price of Rs180 per kg might be a temporary arrangement for providing relief to people.

According to the sugar price notification of April 20, 2023, the cost of sweetener was assessed by the Controller General of Prices/Secretary, Ministry of National Food Security & Research. It stated that the government of Pakistan, under the provisions of Sections-3, 4 and 6 of the “Price Control and Prevention of Profiteering and Hoarding Act, 1977” promulgated “Price Control and Prevention of Profiteering and Hoarding Order 2021” and S.R.O No1065(1)/2021, wherein PART-II of schedule contains white sugar, hereby fixes the price of white sugar, in compliance with the recommendations of the Sugar Advisory Board (SAB).

It noted that the prevailing price of sugar has increased unprecedently (over 30%) during the current month and it is in the best public interest to fix the price of this essential commodity to safeguard consumers interests. SAB during its 6th meeting held on 17th April, 2023, approved the sugar price as calculated by the MNFS&R and advised to issue a notice to the Pakistan Sugar Mills Association (PSMA) and all the provinces intimating the intending price of sugar for their views/comments under sections 3 & of the Price Control and Prevention of Profiteering and Hoarding Act, 1977. Subsequently, the PSMA and provinces were advised to submit their feedback/views and comments on or before 20th April 2023. The PSMA instead of furnishing comments, sought more time to further delay the matter, which is contrary to larger public interest, the notification stated. “In compliance with the advice of SAB, after reviewing the data provided by the provinces, as well as the information and data reported by other government agencies, the retail price of sugar for year 2022-23 works out to be Rs98.82 per kg and ex-mill at Rs95.57/kg inclusive of sales tax. Therefore, in exercise of the powers vested under section 6 of the Price Control and Prevention of Profiteering and Hoarding Act, 1977, and under the provisions of regulation 3 to 5 read with Part II of “Price Control and Prevention of Profiteering and Hoarding Order 2021”, the Controller General of Prices fixed the maximum retail price of locally produced white crystalline sugar at Rs98.82/kg at which it shall be made available to the general public. This will mean an ex-mill price maximum of Rs95.57/kg (inclusive of sales tax). The provincial authorities/ ICT are directed to implement this order under the powers delegated to them and to take action against the mills, dealers, distributors and retailers, who do not comply with this order, as provided under the Price Control and Prevention of Profiteering and Hoarding Act, 1977,” it added.