Friday November 26, 2021

Sugar subsidy case: FIA report skips major fact implicating Punjab govt

April 07, 2020

ISLAMABAD: The FIA Inquiry report into the sugar scam simply misses to mention the critically important summary, moved by the then secretary commerce Younis Dhaga, containing calculation-based recommendations that no subsidy was due on export of sugar.

On the basis of the said summary, the ECC as well as the federal cabinet approved secretary commerce’s recommendations but the Punjab government turned a blind eye to these approved facts and allowed Rs3 billion subsidy.

Informed sources said that in the presence of secretary commerce’s recommendations, approved by the ECC and the cabinet, the Punjab government decision to pay subsidy to sugar mills’ owners was a seriously illegality and a case of corruption to be probed by the National Accountability Bureau (NAB).

There is no explanation available as to why did the FIA inquiry skips to mention summary moved by the Ministry of Commerce. It is interesting to note that the secretary commerce’s summary was opposed by the PM’s Adviser on Commerce Razak Daud.

Despite Razak Dawood’s opposition, the Ministry of Commerce had recommended to the ECC and the cabinet that no subsidy was due on exports of sugar. The commerce ministry’s recommendations were based on calculations of sugar production cost, the prevailing sugar prices in international market and dollar rates after devaluation.

The commerce ministry’s summary contained Razak Dawood’s dissenting note on secretary's summary for the ECC. But in view of very clear recommendations of the secretary commerce, the ECC chaired by Asad Umar approved zero subsidy, ignoring Razak Dawood's dissenting note. The decision was subsequently ratified by the Cabinet. However, later the Punjab government officials and cabinet ignored these calculations and findings approved by the Federal Cabinet. “It makes, thepayment of subsidy clearly illegal,” an official source said, adding that this aspect has been completely ignored in the FIA inquiry report. This missing fact gives a clean chit to the Punjab government.

With the export of sugar in January 2019, the price of sugar started increasing immediately in the local market. The sugar exporters gained benefit in two ways. First they were able to gain a huge sum of subsidy from the Punjab government and secondly, they made profit from the increasing sugar prices in the local market. The sugar price increased from Rs55 per kg in December 2018 to Rs71.44 per kg in June 2019.

According to the FIA inquiry report, the GST increase played no role in the sugar prices’ hike. The GST was implemented from July 1, 2019, whereas the prices were increased before the implementation of enhanced GST rate.

The Punjab government allowed subsidy of Rs5.35 per kg and a total amount of Rs3 billion was allocated on the export of sugar. The government was providing subsidy for export of sugar at a time when the price of sugar was increasing in the domestic market. Out of 0.752 million tons of sugar exported, 0.474 million tons (62 percent) was exported before the withdrawal of subsidy and the remaining 38 percent was exported after the withdrawal of subsidy.

According to the report, the export of one million tons of sugar was recommended during the Sugar Advisory Board (SAB) meeting held on 11th September, 2018 as excess sugar was available. Razak Dawood was chairing the SAB.

The ECC approved the export of one and 0.10 million tons of sugar on 2nd October and 4th December 2019 respectively, the report said, adding. however, during the same meeting, secretary Ministry of National Food Security raised the issue that low production of sugarcane was expected in the upcoming season due to water shortage.