ISLAMABAD: With sugar prices hovering around Rs 200 per kilogram, a special National Assembly panel is poised to examine how policy gaps, export incentives, and industry manoeuvres have enabled mill owners to reap windfall profits estimated at Rs 300 billion—and whether a new tax can claw some of it back for consumer relief.
The multi-party panel, led by PTI’s Atif Khan, is scheduled to meet Monday (today) to probe what it calls the “hidden beneficiaries” behind the sugar price spiral. The inquiry will look into years of cyclical price hikes, export-import swings, and the role of government deregulation.
The push for accountability follows testimony from the Auditor General of Pakistan at a Public Accounts Committee meeting, confirming that sugar mill owners had benefitted massively from price fluctuations and export-friendly policies. Critics in parliament have gone further, branding the sugar industry a “mafia” with disproportionate influence over policy.
Tax on windfall profits of sugar millers being mulled
Federal Minister for National Food Security and Research, Rana Tanveer Hussain, recently announced full deregulation of the sector — removing government control over prices, procurement, and supply. But while he vowed to act against hoarders and named certain mill owners on the Exit Control List (ECL), retail prices have continued to soar beyond agreed limits.
A July 15, 2025 agreement between the government and Pakistan Sugar Mills Association (PSMA) fixed the maximum ex-mill price at Rs 165/kg, allowing a monthly increase of Rs 2 until mid-October. Insiders say the Rs 2 increase was based on a 25% interest rate that has since dropped to 11%, making the agreed carrying cost — and thus the price escalation — unjustified.
Ministries of Finance and Commerce reportedly resisted sugar exports over price concerns, but some mill groups withheld stock until export approvals to capitalise on higher global prices — reportedly Rs 30-40/kg more than domestic rates — while avoiding sales tax on exports.
The government is now preparing to import 100,000 tons of sugar via the Trading Corporation of Pakistan by October to ease shortages. This follows a broken assurance from PSMA that prices would not exceed Rs 140/kg.
Atif Khan’s panel is now weighing a windfall tax similar to that imposed on banks, aiming to capture part of the extraordinary profits made by millers and channel them towards subsidising sugar for consumers. The move could mark the first serious fiscal pushback against a sector long accused of manipulating both the market and policy to its advantage.
Copyright Business Recorder, 2025
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