SHC moved against Rs30bn sugar export subsidy for mills

The Sindh High Court has issued notices to the ministry of commerce, the State Bank of Pakistan, the sugar mills association and others on a petition seeking the withdrawal of a cash subsidy from sugar mills for violating the Economic Coordination Committee’s condition on sugar exports.

Syed Mureed Ali Shah submitted in the petition that the committee approved sugar exports and a subsidy for only those mills which had not only cleared outstanding dues of farmers relating to the last season, but also met other conditions.

He submitted that the high court had also passed an order directing the sugar mills to pay the outstanding dues of the sugarcane growers, but the mills did not do so. He alleged that on January 19, 2017, in collusion with the Pakistan Sugar Mills Association, the sugarcane commissioner had issued a clearance certificate to the effect that the sugar mills had cleared the outstanding dues of farmers up to the last season and had started the crushing at full capacity to facilitate themselves in obtaining the cash freight support of Rs10.70 per kg and Rs9.30 per kg, adding up to Rs20/kg, from federal government and the Sindh government, respectively.

He submitted that in spite of the unequivocal order of the court, the sugar mills flouted the orders as well as the ECC decision in utter disregard. He stated that the government gave the impression that the subsidy on exports of sugar would help the sugar mills to acquire sugarcane from growers at the prescribed rate and ensure timely payments to farmers; however, the procurement of sugarcane was not regular and farmers did not get paid at the agreeable Rs160 per 40kg.

The petitioner alleged that the sugar mills in connivance with sugarcane commissioner deliberately delayed the crushing schedule, which served the interests of millers, as the crop lost weight while its sugar content increased giving a double benefit to the sugar mills. He added that desperate growers had no other option but to sell their crop at throwaway prices to sugar mills brokers/agents.

He said the millers got their crushing schedule delayed till late December which was a violation of Condition-VI of the cabinet’s Economic Coordination Committee’s (ECC) approval with regards to sugar exports.

The petitioner further said that the huge subsidy on sugar exports given to the sugar mills did not benefit the poor growers, who were paid Rs120 for 40kg, which was against the order of the court. He submitted that the basic condition for sugar exports was for sugar mills to start the crushing after November at full capacity to become eligible for exports, but they did not meet the condition in letter and spirit; consequently, the sugar mills were not entitled to the sugar export subsidy.

The court was requested to direct the federal and provincial governments to withdraw the cash freight subsidy on sugar exports as the mills had violated Condition-VI of the Economic Coordination Committee and the additional cash freight approved by the Sindh cabinet. The court was also asked to retrain the government from implementing the federal and provincial cabinets’ decisions for providing the cash freight subsidy on sugar exports till pendency of the petition.

He also requested the court to direct the sugar mills to refund all monetary benefits drawn by them with regard to the cash freight subsidy on sugar exports approved by the federal and provincial governments.

A division bench headed by Justice Mohammad Ali Mazhar, after the preliminary hearing of the petition, issued notices to the federal and provincial law officers, the sugar mills association and others and called their comments.