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April 16, 2021

Sugar crisis yet to subside as mills, govt blame each other


April 16, 2021

LAHORE: Despite direct monitoring by the prime minister himself and clear instructions of the court for reduction in price of sugar, plus adequate supply during Ramazan, the crisis of short supply and price-hike is yet to subside as the mills and government continue pointing figure at each other.

There are still complaints about short supply of sugar in the market as well as its higher prices. There are also complaints that only a kilogram of sugar was being sold to each consumers, creating inconvenience for people. The specially set up special bazaars have also failed to overcome short supply of sugar in the market.

On Thursday, Pakistan Sugar Mills Association (PSMA) Punjab Zone appealed to the Punjab chief minister to intervene and help the industry get out of the crisis. A spokesman for the PSMA claimed that due to harassment in Punjab, the sugar dealers, buyers and traders were not buying sugar from mills. As a result, the supply line from mills to market has become totally dry.

He urged the government to invite all stakeholders in order to avoid crisis getting worse. There is no buyer of sugar for approximately last two months and mills are facing crisis as some of them have to clear growers’ dues and some have to clear the banks, the government liabilities and taxes. But due to no sale, the situation had turned into a crisis.

The ex-mill sugar price of Rs80 per kg has inflicted losses of crores of rupees on the sugar industry. The cost of production of one kilogram of sugar has gone up to Rs105, the spokesman insisted.

The PSMA spokesman claimed that if the current situation continued, it might lead the industry to bankruptcy, leaving thousands of people jobless. Under these circumstances and crisis situation, the industry could not run any more, he claimed.

He said the sugar industry was ready to cooperate and work with the government in the national interest. The negative news in the media being propagated to tarnish the image of the industry were not based on facts and were aimed at destroying the image of the industry.

However, a senior official of the Punjab government contradicted the PSMA claims about low supply of sugar in the market and high cost of production.

Commenting on the allegation that the sugar mills and traders were facing harassment in Punjab and that supply-line of sugar was disrupted due to this reason, Punjab Cane Commissioner Muhammad Zaman Wattoo said the PSMA assertion was utterly baseless and against the facts. No harassment of any kind of sugar mills or the traders was being made in Punjab, he added.

As a matter of fact, on reports of the hideous practice of speculation and artificially jacking up prices of sugar above Rs110/kg in the month of Ramzan, the Federal Investigation Agency (FIA) had taken action against the speculators. Very compelling incriminating evidence was captured during this scoop, he added. The speculators had been evading hefty amounts of tax in addition to jacking up of prices, he claimed.

Keeping in view the massive tax evasion due to selling of sugar to unregistered brokers, dealers and benamidars, the Punjab government promulgated the Punjab Sugar (Supply-chain Management) Order 2021 and the Punjab Prevention of Speculation in Essential Commodities Ordinance, 2021, which make it mandatory to sell sugar only to the registered brokers and dealers.

This documentation of sugar industry could not be termed harassment, the came commissioner said, who is monitoring implementation of the court decision regarding supply of sugar at notified rates.

It is heartening that the law-abiding traders have started getting themselves registered. So far, more than 1,000 brokers and dealers have been registered in the province.

Regarding PSMA’s allegation that ex-mill price of Ra80/kg is very low and the sugar mills were facing losses, he said the assertion was also fallacious. He made it clear that the sugar mills themselves filed average sale price of sugar of Rs67 with the tax authorities. If sales tax was added to the sale price, filed by the mills themselves, the ex-mill price comes to Rs78.39 per kg, the cane commissioner added.

The ex-mill price of Rs80/kg had been calculated using the data provided by the sugar mills themselves. The sugar mills could not retract their financial statements containing sale price of sugar, he opined.

The ex-mill price determined by the government stood the test of judicial review in a recent hearing by the Lahore High Court. The court allowed obtaining 155,000 metric tonnes (MT) of sugar for the month of Ramazan. Out of that, 30,000-MT sugar was being sold in Ramazan bazaars at the subsidised rate of Rs65 per kg, the cane commissioner added.

Sugar price in the open market has been notified to the maximum of Rs85 per kg and it is being implemented by the authorities. As regards maximum quantity of sugar, it is being given in packing of one and two kilogram, keeping in view the local administrative convenience, he concluded.