Both PML-N, PTI govts danced to sugar cartel’s tunes

ISLAMABAD: The Sugar Commission report showed how the sugar cartel has been blacking the governments and dictating its terms to make more and more profits at the cost of public interest.

The governments, both the present (PTI) and the previous one (PML-N), continued to dance to the sugar lobby’s tunes and took decisions which greatly served the interest of the sugar mill owners.

Discussing the events of 2014-15, the report said that Pakistan Sugar Mills Association (PSMA) in a meeting with the then commerce secretary Shahzad Arbab (presently SAPM on Establishment) on Nov 11, 2014 undertook to start the crushing season for the next year provided that the government agrees to: imposition of 25 percent import duty on import of sugar; permission of export of 0.5MMT of sugar; revival of SRO 77(1)/2013 be extended to export by land in dollar terms to Afghanistan and beyond to provide subsidy on export of sugar.

The very next day on Nov 7, 2014, the Commerce Ministry forwarded the same proposals to the ECC, which on Nov 12 allowed sugar export of 0.5MMT; imposition of 20 percent regulatory duty on import of sugar through the SRO; and permitted export of sugar to Afghanistan and beyond via SRO 77 of 2013. The ECC did this despite the opposition of the Revenue Division.

The commerce secretary again chaired an inter-ministerial meeting with PSMA on Dec 12, 2014 and recommended: increase in quota for sugar export from 0.5 to 0.6MMT; regulatory duty to be imposed on the import of sugar; minimum price for export to Afghanistan be fixed at $450 per MT; inland freight subsidy of Rs2 per kg (costing Rs1.3 billion); cash subsidy on sugar export of Rs8 per kg (costing Rs5.2 billion); and the total cost of subsidy will be Rs6.5 billion to be shared equally by the federal and respective provincial governments.

On Dec 23, 2015, commerce secretary forwarded the same proposals to the ECC, which on the very next day approved the proposals.

The commission observed that the PSMA came up with its demands for the government just before the start of the crushing season to get permission for the sugar export otherwise they will not be able to start the crushing season. “As has been observed in the analysis of the next subsidy schemes, this is the patterns adopted by the PSMA at the start of every crushing season,” the report said.

Next year on Nov 20, 2015, the PSMA met the then prime minister Nawaz Sharif. Five days later on Nov 25, 2015, the PM constituted an inter-ministerial committee to “examine the problems of the sugar mills.”

The meeting of this committee was held on 30-11-2015 and 3-12-2015 with commerce secretary Shahzad Arbab in the chair.

The committee recommended the export of 0.25 MMT sugar till March 2016 besides recommending the subsidy of Rs10 per kg. On Dec 6, 2015, a meeting was held under commerce secretary Shahzad Arbab, which recommended to allow export of 0.5MMT of sugar; cash freight support of Rs13 per kg for export of sugar to be shared equally by federal and respective provincial government; minimum price for export to Afghanistan $450 per MT; and the cash support may be disbursed through SBP.

On the very next day on Dec 7, 2015, the ECC approved these recommendations. The commission observed, “Right before the start of the crushing season, the PSMA started pressurising the government to allow the export of sugar along with the subsidy. The government, under pressure from commencing the crushing season, allowed the export along with the subsidy.” Next year on Dec 19, 2016, a meeting of Sugar Advisory Board was held in the Ministry of Food Security, which recommended the export of 0.3 MMT of sugar surplus without any subsidy. The commerce ministry recommended 0.22 MMT of export to ECC, which on Dec 28, 2016 approved it. On March 16, 2017, a meeting of SAB was held to recommend further export of 0.4MMT.

The commerce ministry on the very next day recommended for the ECC export of 0.2MMT sugar. On March 28, 2017, the ECC approved commerce ministry’s summary.

Two months later in May 2017, the SAB after consultation with PSMA recommended further export of 1.2MMT of sugar without making it time bound. The commerce ministry in July 2017 proposed export of 0.6MMT while the ECC allowed export of 0.3MMT without any subsidy.

On Sept 7, 2017, the PSMA in a meeting with government demanded that 2MMT of sugar be allowed to be exported with a subsidy of Rs18 per kg. The PSMA also met with the PM at his office the same day.

On Sept 12, 2017, a meeting was held under commerce secretary M Yunus Dagha. The meeting sent its recommendations to ECC, which decided to; allow 0.5MMT export of sugar; maximum subsidy of Rs10.7 per kg; subsidy shall be shared equally by the federal and the respective provincial governments.

Again on Nov 27, 2017, commerce secretary Yunus Dagha moved a summary to the ECC to allow export of sugar. On Nov 28, the ECC decided to allow additional 1.5MMT of sugar subject to the conditions of decision of the ECC dated 14-09-2017.

On Nov 22, 2017, secretary agriculture Sindh moved a summary for the grant of subsidy on export of sugar. He told the cabinet that the PSMA requested to consider additional support subsidy of Rs9.30 per kg in addition to Rs10.70 per kg, which was already sanctioned by the federal government. But, despite the opposition of minister for food and finance secretary, the cabinet approved additional cash freight support of Rs9.3 per kg in addition to its 50 percent share in the cash freight support of Rs10.70 per kg allowed by the federal government.

Next year on Sept 11, 2018 (during PTI government) on the request of Commerce Division, a meeting of SAB was held to conclude that there would be surplus of 1.096 MMT of sugar. On Sept 18, 2018, Commerce Division forwarded its recommendations to the ECC, which on Oct 2, 2018 decided to allow export of 1.0MMT of sugar with no freight or financial support to be provided to millers by federal/provincial government.

On Dec 3, 2018, the PSMA met with the PM’s adviser on commerce and minister for food security and demanded that the condition of export of 1MMT of sugar might be relaxed and further 0.1MMT might be allowed to be exported. The PSMA also demanded that the federal government should immediately release Rs2 billion of outstanding subsidy claims besides asking the provinces to pay freight support of sugar policy in their domain.

On Dec 4, 2018, the ECC met to allow enhancement in the export quota by 0.1MMT. The ECC directed the finance ministry to release Rs2 billion for the outstanding claims of subsidy on sugar. The ECC also left it to the provinces to decide whether or not they wanted to give any subsidy to the sugar mill owners on the export allowed by the ECC.

Later the Punjab government after the Punjab CM too was approached by PSMA, allowed Rs3 billion subsidy.