Govt allows 200,000 tonnes of sugar exports

ISLAMABAD: The economic coordination committee of the cabinet (ECC) on Tuesday allowed sugar mills to export 200,000 tonnes of sugar by 31 May, saying the decision was made in line with the industry’s recommendations. 

The ECC meeting, chaired by the finance minister Ishaq Dar discussed and approved a proposal by the ministry of commerce for further export of 0.200 million metric tonnes of sugar without any subsidy.

It was decided that the sugar export would be made within 60 days after approval of export quota by the State Bank of Pakistan or by 31 May, 2017, whichever is earlier.  It was further decided that only those mills, which have cleared outstanding dues of farmers relating to last season and have crushed at optimum capacity, will be allowed to export.

In December 2016, the ECC had allowed 225,000 tonnes of sugar export till 31 March, 2017 with a condition that the inter-ministerial committee would recommend to the ECC stoppage of further export in case of sugar price hike in the domestic market.  Subsequently, the Pakistan Sugar Mills Association, representing 90 sugar mills across the country, ran an advertisement campaign, requesting the government to increase export quota and timeline given the surplus inventory. The association urged the government to revise the annual sugar export quota to one million tonnes. 

“The ECC gave approval for extending the time line and enhancing the quantity of exports in the light of these recommendations,” the committee said in a statement. “A close watch would be maintained on the domestic sugar prices with a view to suspend exports in case of adverse impact on domestic prices.”

Pakistan produces around six million tonnes of sugar and consumes only around 4.5 million tonnes a year. Moreover, the committee also approved an extension in the period of the reduced rate of withholding tax at 0.4 percent for non-filers up to 30 June, in consideration of a proposal submitted by the revenue division. 

It also gave approval to the disbursement of one month salary for December 2016, amounting to Rs380 million, for employees of Pakistan Steel Mills. ECC also approved a proposal by the food ministry to procure wheat (2016/17 crop) against the target of 7.05 million tonnes for an estimated Rs224.86 billion. 

The committee said public sector’s wheat stocks help augment supplies during the lean period and fulfill the food requirements of deficient areas. ECC further approved a proposal put forth by the ministry of petroleum and natural resources for changes in the existing procedures for sampling and testing of imported petroleum products.

Therefore, the Hydrocarbon Development Institute of Pakistan (HDIP) laboratory will test quality of imported petroleum products prior to unloading. The institute will also carry out the product’s sampling for quality analysis in the presence of importer’s surveyors. 

In case of quality dispute, re-sampling would be made by a third party surveyor in the presence of authorised representatives of concerned stakeholders, including HDIP. The fresh sample would be tested in the presence of nominated representatives of the importer and HDIP by another independent laboratory, preapproved by the Oil and Gas Regulatory Authority (OGRA). 

It was decided that the OGRA would also independently carry out random sampling from vessels carrying imported petroleum products for testing through any of the laboratories approved by the authority for effective monitoring, quality assurance and greater transparency in the process.

The ECC also considered another proposal from the petroleum ministry regarding the gas allocation from the Kandhkot field of Pakistan Petroleum Limited (PPL). The committee may validate the allocation of 150 million metric cubic feet/day (mmcfd) – including 100mmcfd directly through PPL and 50mmcfd from Sui Northern Gas Pipelines Limited – to Thermal Power Station Guddu (TPSG). The allocation arrangement had expired in 2013. 

Further, PPL would supply 50mmcfd additional gas to TPSG with effect from 1 June or the date of commissioning of TPSG’s new pipeline, whichever is earlier.  The entire 200mmcfd direct gas supply will be subject to minimum 72.5 percent take-or-pay quantity. Moreover, the outstanding receivables against supply of gas to TPSG would be settled forthwith subject to reconciliation, said the committee.