PM defends decision to export imported sugar

ISLAMABAD: Prime Minister Shehbaz Sharif has defended the government’s decision to export around 108,000 metric tonnes (MT) of imported sugar, terming reports being circulated in the media regarding the initiative as “fallacious” and maintaining that the measure was aimed at preventing financial losses arising from the approaching expiry of the commodity’s shelf life.

During a recent meeting of the Federal Cabinet, the Prime Minister said the government had taken the decision to import sugar last year solely to ensure adequate domestic availability and protect consumers from a sharp increase in prices.

He directed Deputy Prime Minister and Foreign Minister Senator Ishaq Dar to apprise the Cabinet of the factual position regarding the imported sugar and the proposed export, amid what he described as misleading information being disseminated by certain elements through the media.

Briefing the Cabinet, the Deputy Prime Minister said sugarcane production had declined by around 15 percent during the 2024-25 crushing season due to several factors, including heatwave and crop diseases. The decline in production, coupled with other supply-side constraints, had contributed to a significant increase in domestic sugar prices.

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In response, the Economic Coordination Committee (ECC) in June 2025 allowed the import of up to 500,000 MT of white crystalline sugar, a decision subsequently ratified by the Federal Cabinet.

However, the Trading Corporation of Pakistan (TCP) ultimately imported only 300,000 MT during September-November 2025.

Of the imported quantity, around 192,000 MT was sold in the domestic market, while approximately 108,000 MT remains in TCP stocks.

The Cabinet was informed that the remaining stock was required to be disposed of urgently as its two-year shelf life was approaching expiry.

At the same time, international sugar prices had increased considerably, making export of the remaining stock a potentially viable option.

According to the briefing, export of the 108,000 MT would enable the government to recover the landed cost and carrying cost of the commodity and avoid potential losses resulting from deterioration or expiry.

The government’s decision to export the remaining sugar comes against the backdrop of an earlier policy decision to allow substantial exports when the country had reported a surplus.

According to official information, the government had allowed export of around 790,000 MT of sugar during 2024-25 after the industry reported a surplus, while maintaining a buffer stock of approximately 504,000 MT.

Subsequently, heatwaves, crop diseases, competition from other crops and lower sugarcane production reduced domestic sugar output by around 15 percent. Supply constraints and market distortions pushed retail sugar prices to around Rs220 per kilogramme in some markets, with concerns that prices could rise beyond Rs250 per kg.

The government therefore allowed imports to address the emerging shortage and contain the increase in prices. However, TCP later faced difficulties in disposing of the remaining imported stock in the domestic market.

The corporation attempted to sell the sugar through tenders held on November 17 and 25, 2025, but the bids received were substantially below the landed cost and were consequently rejected.

The ECC was informed that prevailing local ex-mill sugar prices were around Rs132-140 per kg, creating a cost differential of approximately Rs50-55 per kg if the imported sugar were disposed of in the domestic market.

In addition, TCP was incurring mark-up of around Rs2 per kg on the stored sugar, resulting in a monthly financial burden of more than Rs200 million.

The imported sugar has a shelf life of two years from its date of manufacture, making timely disposal necessary to avoid deterioration and possible loss of public funds.

The Cabinet was also informed that a private company from Uzbekistan had expressed interest in purchasing the remaining sugar.

However, the Steering Committee on Sugar, in its meeting held on August 12, 2026, concluded that the commodity could not be sold directly to a single private-sector company under the applicable Public Procurement Regulatory Authority (PPRA) rules.

The committee therefore directed the Ministry of National Food Security and Research to seek ECC approval for export of the remaining 108,000 MT through an international competitive bidding process.

During deliberations, the ECC observed that the proposal did not qualify as an unsolicited bid under the PPRA Rules, 2004. The forum was also informed that previous attempts to dispose of the sugar locally had failed because domestic buyers offered prices substantially below the landed cost and demand for the particular variety was limited.

The ECC, however, expressed concern that government projections regarding sugar and other food commodities had repeatedly proved inaccurate, resulting in a recurring cycle of imports followed by exports and imposing significant economic costs on the country.

The forum directed the Ministry of National Food Security and Research to ensure that future projections were based on robust empirical data, realistic demand and supply assessments and prevailing market trends.

The Commerce Division proposed that the terms and conditions of the international tender should clearly specify whether border routes would be included in the export arrangements. It also proposed that the bidding process be televised live to ensure transparency.

The Commerce Division further maintained that TCP could not be held responsible for ensuring that the proposed export would not adversely affect domestic sugar availability or prices, arguing that this responsibility falls within the mandate of the Ministry of National Food Security and Research.

Meanwhile, the ECC also expressed serious concern over outstanding payments against the 192,000 MT of imported sugar already sold in the domestic market.

The meeting was informed that around Rs15 billion remained receivable from the provincial governments of Punjab and Balochistan, corporate-sector entities and sugar dealers in Karachi.

The ECC directed TCP to submit a complete bifurcation and ageing schedule of the outstanding Rs15 billion at its next meeting.

The Prime Minister, meanwhile, maintained that the original import decision had been taken to ensure adequate domestic supplies and provide relief to consumers at a time when domestic production had fallen and sugar prices were rising. He said the subsequent proposal to export the remaining stock was being considered in a fundamentally different market situation, where international prices had increased and continued storage was imposing a financial burden on the government.

The Prime Minister expressed regret over attempts by certain elements to distort the facts surrounding the government’s sugar import and export decisions for what he described as ulterior motives.

He directed that the factual position be clearly communicated to the Cabinet to counter what he termed “fallacious” information being disseminated through the media.

Copyright Business Recorder, 2026