National Accountability Bureau (NAB) on Wednesday said that an inquiry into billions of rupees of inland freight subsidy approved for sugar industry in 2013 will be completed within one month. A team of NAB, headed by Director Nauman Aslam, informed a parliamentary panel headed by Asad Umar that 40 per cent sugar out of 0.5 million tons had been exported prior to ECC's decision to extend the subsidy.
The head of NAB team said that it has examined the record besides interviewing the concerned officials, adding that apparently the case is weak. As the inquiry is completed, it would be submitted to the Law Section and then to the Board of Directors for further action, if required. Giving the details of sugar subsidy issue, NAB said that Standing Committee, Industries & Production in its decision on May 8, 2015 referred the issue of "the criteria of determination of freight subsidy of Rs 1.75 per kg on export of sugar" to NAB for investigation.
The ECC allowed the export of a total of 1.2 million tons of sugar on January 1, 2012, May 15, 2012, November 22, 2012 and December 11, 2012. By December 2012, only 0.305 million tons of sugar was exported out of the total allowed quantity of 1.2 million tons.
On the request of PSMA on December 20, 2012, Ministry of Commerce moved a summary for ECC on January 5, 2013 for grant of subsidy to facilitate the export of sugar, due to an increase in cost of production of sugar. The ECC in its decision on January 10, 2013 approved the inland freight subsidy of Rs 1.75 per kg for the remaining quantity of 0.895 million tons. However, from January 2012 to February 2013 out of the total allowed quantity of 1.2 million tons only 460,451 MT sugar was exported.
On 26th February 2013, PSMA approached the Ministry of 'Commerce with the request that freight subsidy may be granted from the date of export of first consignment ie for the entire quantity of 1.2 million tons. Accordingly, on a summary moved by the Ministry of Commerce the ECC in its meeting on March 6, 2013 extended the inland freight subsidy of Rs 1.75 per kg to the entire quantity of 1.2 million tons. The total financial implication of the subsidy was Rs 2.10 billion.
Subsequently, ECC in its decision on September 7, 2013 allowed the export of an additional quantity of 0.5 million tons of sugar and decided to grant an inland subsidy of Re 1/kg. In 2015, TDAP initiated the process of selection of auditors for pre-audit/scrutiny of sugar subsidy claims. The claims are currently being scrutinised by TDAP. No amount till date has been disbursed in this regard.
Relevant records have been received from Ministry of Commerce, Ministry of Industries & Production, Finance Division and Trade Development Authority of Pakistan, which have been scrutinised. According to NAB, records have also been received from Secretary Standing Committee on Industries & Production for determination of scope of inquiry, and from Joint Secretary (Committee), Cabinet Division, Islamabad regarding ECC committee meetings and decisions, which have been scrutinised. Statements of persons involved at Ministry of Industries & Productions, Finance Division have been recorded.
Statements of persons - except the then Additional Secretary MoC/Secretary TDAP Abdul Kabir Kazi, and the then DG TDAP Abdul Karim Daudpota - involved at Ministry of Commerce and TDAP have been recorded. Working on calculation for freight rate subsidy was carried out by Mujeeb Ahmad Khan, Consultant TDAP, who stated that he did not propose a straight freight subsidy of 65%, but prepared a hypothesis supporting three rates of subsidy ie 35%, 50% and 65% with the decision left to the competent authority.
However, TDAP issued a letter on January 1, 2013 with the recommendation of 65% (with mention of average subsidy at Rs 2.9/Kg). But ECC in its decision overruled recommendations/comments from MOIP & FD, and decided to grant a freight rate subsidy of 1.75/KG (almost 39.2%) of freight cost. Freight cost for different zones was calculated by the Consultant of TDAP, with input from representative of "Pakistan International Freight Forwarders Association".
Statements of the then Secretary General of Freight Forwarding Association of Pakistan, Daud Babadat, CEO of Transfreight Corporation (Pvt) Ltd, then DG TDAP and then Additional Secretary MOC/Secretary TDAP are required for final conclusion of the case. NAB, however, submitted that upon request of PSMA, MoC through TDAP carried out working and processed a summary for ECC, and ECC decided to grant an inland freight subsidy of Rs 1.75, which was less than the minimum rate quoted in summary. Secretary Industries and Production, Arif Azim in his remarks said that the Economic Co-ordination Committee (ECC) of the Cabinet always takes decisions after going through the required data submitted as justification.
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