No sugar import as per ECC decisions: Body formed to fix responsibility

31 Aug, 2021

ISLAMABAD: Finance Minister Shaukat Tarin has constituted an inter-ministerial committee to fix responsibility for not importing sugar as per the ECC decisions which allegedly, inflicted about Rs 5 billion loss to the exchequer, well-informed sources told Business Recorder.

On August 25, 2021, Ministry of Industries tabled a hurriedly prepared summary for approval of the ECC: (i) tender for import of 200,000 MT of sugar; or (ii) due to high price for the current tender, the tender may be scrapped and a fresh tender may be called for.

Recently, the Trading Corporation of Pakistan (TCP) received the lowest tender of $ 637 per ton for 0.2 million tons of sugar. The landed cost of which is about Rs 111 per kg and after inclusion of freight charges, it will cost in Rs 115/kg without sales tax. The government has to bear a loss of Rs 25 per kg, if it sells it at Rs 90/kg.

A couple of months ago, sugar price at the international market was almost $ 100 per ton less than the recently offered price.

In the past, concerned Ministries failed to implement the ECC decisions regarding sugar due to which the price of sugar in the retail market touched Rs 110/kg.

On August 25, 2021, the ECC held threadbare discussion on the import of sugar after being informed that the current sugar reserves stood at 1.18 million MT, which will be exhausted by end-October, 2021.

Ministries told to expedite import of wheat, sugar

Finance Minister observed that the ECC and the Federal Cabinet took a decision on import of 500,000 MT sugar in January, 2021. Since then, only 100,000 MT sugar was imported. During this period, a number of tenders for importing sugar were scrapped for reasons not recorded.

The ECC observed that the import of sugar was now being proposed at a higher cost that may result in substantial loss to the national exchequer.

The ECC opined that there was a need to look into the reasons for non-procurement of sugar through import immediately after the decision by the ECC and Cabinet in January, 2021, the reasons for scrapping tenders for import of sugar and the authority which decided to scrap the tenders leading to accrued financial loss as a result of late import of sugar.

The ECC also constituted a Committee under the Chairmanship of Secretary, Finance Division, comprising Secretary, Industries & Production Division, Secretary, Commerce Division, Secretary, National Food Security & Research and Secretary, Law & Justice Division to look into the: (i) reasons for non procurement of .sugar through import immediately after the decision by the ECC and Cabinet in January, 2021; (ii) reasons for scrapping tenders for import of sugar and the authority which decided the said scrapping; and (iii) financial loss to be accrued due to late import of sugar.

TCP tenders to buy 200,000 tonnes of sugar

The Committee will submit its report to the ECC for consideration with viable recommendations to make the process of import of sugar more transparent and efficient. Secretarial support to the Committee shall be provided by the Ministry of Industries and Production.

Informed sources in Commerce Ministry argue that sugar procurement is not in the hands of Commerce Ministry as the TCP is just a procuring agency, adding that, actually this issue is related to MoI&P and Ministry of National Food Security and Research not the Commerce Ministry.

Another issue, the government is facing, is authenticity of accurate data of different commodities.

“Information is received from PBS is piecemeal and that is why decisions are not taken at the appropriate time. The sugar stock figures of both Punjab and Sindh were inaccurately reported to federal government,” the sources said, adding that the incorrectness in figures was found during physical examination of sugar stocks in both provinces.

In another summary the MoI&P submitted the following proposals to the ECC to import the remaining 500,000 MT of sugar for strategic reserves,: (i) approve an additional amount of Rs 27.00 billion, with the cumulative total of Rs 45.00 billion, to import 500,000 MT of sugar. Finance Division may arrange funds to the tune of Rs 45.00 billion through supplementary grant or any other financial arrangement for import and storage of sugar for three months approximately (calculated on the basis of landed cost per metric ton of the last tender floated by TCP) and warehousing cost of TCP; and (ii) Ministry also requested the ECC to direct the TCP to make storage arrangements along with USC. The sugar will be released for sale as per market requirements. The ECC approved both the proposals.

The decisions of the ECC are likely to ratified by the Federal Cabinet in its meeting on Tuesday (Aug 31).

Copyright Business Recorder, 2021

Read Comments