Friday December 03, 2021

Govt processing sugar import to meet emerging shortages

September 09, 2020

ISLAMABAD: The government is processing fast the import of 300,000 metric tons of sugar so that there is no shortage, as predicted at the official level, of the sweetener by the end of the current month or early October if the supply was not augmented from abroad.

On the federal government’s directives, the Trading Corporation of Pakistan (TCP) last month scrapped the first sugar import tender as quoted prices were described as much higher. The response from international bidders was poor due to strict terms and conditions of the tender. Some five bidders had participated in the tender but only two parties showed interest in the supply of sugar while the remaining suppliers submitted regret letters.

Then, the lowest bid offered to supply sugar at $471/MT for DPO (Delivered at Place Unloaded), $459/MT for bulk and $453/MT for containerised shipment. The second lowest bid offered was $474/MT in bulk.

An official said that the TCP subsequently issued another international tender to import 100,000 MT on Sept 2 for which the offers were opened on Tuesday. He said the lowest bid this time came to $459/MT, which will be processed to decide whether or not to accept it keeping in view the offered terms and conditions.

A sugar industry source said the government previously tried to import 300,000 MT sugar but only two parties filed tenders, which were cancelled. The government has exempted sugar import from withholding tax and 17% sales tax in a bid to lower its domestic prices.

The source said sugar import was allowed without documentations like certificate of origin of the commodity, its manufacturer or bag marking of manufacturer restrictions. He said this will promote sugar import from a country, banned during COVID-19, and claimed that sugar from a foreign destination was being repacked abroad with local traders’ names.

Meanwhile, the domestic “sugar mafia”, which is facing a multitude of intensive investigations by a number of government agencies in the wake of the findings of the sugar inquiry commission, is watching the efforts to import the commodity from the sidelines. The source said that it would not be possible to sell to the ordinary consumers the sugar imported on the quoted price for less than Rs90/kilogram. He said that the price would have come down significantly if the government had given tax concessions introduced for its import. In any case, sugar is being currently sold for Rs100/kg or above in the market.

When the sugar commission had started inquiry into the sugar scam early this year, the commodity was selling at Rs80/kg. The government faces a challenge to reduce the sugar prices even after import of the commodity because the international prices are presently quite high compared to domestic rates.

The Economic Coordination Committee (ECC) of the cabinet expressed the view last month that Pakistan may face sugar shortage by September-end or early October and there was an immediate need to import sugar.

The federal government has left it to the provincial administrations to bring down the prices of sugar curbing hoarding and directed the provinces to take every possible step to decrease the sugar prices.

National Food Security & Research Minister Syed Fakhar Imam told The News a few days back that it is always the provincial machinery/local magistracy, which is required to deal with the hike in the prices of commodities like sugar and wheat. He said that the federal government has urged the provinces to take effective steps to control the sugar and wheat prices. However, he said that the prices of these commodities would come down after their import in sufficient quantities.

Fakhar Imam suspected the handiwork of what he called “players” who were responsible for the price hike. Not only he but several others in the federal government are surprised over the unprecedented consumption/offtake of 1.041 million tons of sugar during the month of July as against the normal consumption pattern of 442,000 metric tons/month. This happened when most of the businesses relating to beverages, toffees, bakeries, sweet shops, marquees and wedding halls, which use 70pc of the total sugar, were closed due to COVID-19 pandemic.

Meanwhile, the price of imported wheat has risen around Rs2 per kg despite arrival of two vessels carrying over 125,000 tons in the last 12 days while the third vessel loaded with 69,000 tons has docked at the Karachi Port. The imported wheat is now selling at Rs47.50/kg compared to Rs45-46/kg while the rate of locally-produced wheat has reverted to Rs51 per kg from Rs48/kg. Local wheat rate had fallen to Rs48 from Rs52 in the last week of August following the arrival of first Ukrainian wheat consignment.