Government may procure another 50,000 tons of sugar

The government is likely to procure another 50,000 tons of sugar to appease local mill owners who are reportedly exerting pressure on the Ministry of Industries and Production (MoI&P) through Punjab-based association. With the approval of new proposal by the Economic Co-ordination Committee (ECC) of the Cabinet headed by Finance Minister Ishaq Dar, total procurement will reach 150,000 tons. The next meeting of the ECC will be held shortly. 

According to official documents available with Business Recorder as per the ECC decision in case No: ECC.178/14/2007 dated 30-11-2007, Trading Corporation of Pakistan (TCP) is required to keep 500,000 MT of sugar at any one time as strategic reserve stock to ensure price stability in the market in case of any unforeseen situation. The National Sugar Policy (2009-10) also emphasised that TCP shall maintain strategic reserves of 500,000 million tons of white sugar at any one time and its modalities would be reviewed periodically. 

TCP is however, required to allocate monthly quota of 50,000 MT sugar to Utility Stores Corporation (USC) and also provide sugar to Canteen Stores Department (CSD), Pakistan Navy, Pakistan Army and any other government entity on the directions of the government from time to time. For this purpose, TCP maintains strategic reserves of sugar and is continuously engaged in procurement of sugar from local sugar mills and also imports sugar from international market as per requirements on the directions of ECC of the Cabinet. 

The documents further disclose that presently, TCP has 31,091 MT of sugar in it stocks from where 24,668 MT sugar is being allocated to USC for October 2013, leaving a balance of 6,823 million tons of sugar with TCP in October 2013. According to the MoI&P, procurement of 100,000 MT sugar is under process, which will be utilised for regular quota of USC during November/December 2013. Meanwhile, Pakistan Army has also placed a requisition for 12,400 million tons of sugar for their utilisation during 2013-14 for which TCP has no reserve stocks to meet the requirement. 

The MoI&P argues that based on the stocks, TCP requires 150,000 MT of sugar for allocation to USC against its quota for January/February 2014 and to meet the requirements of Pakistan Army as well. For this purpose, procurement process needs to begin in the first week of November 2013, as procurement cycle takes about 50-60 days inclusive of the time for re-sampling for completion of codal formalities and taking possession of stock after payment to sugar mills. 

The ministry has proposed that keeping in view prevalent situation TCP may be allowed to procure 150,000 million tons of sugar from domestic sugar mills to maintain strategic reserves and for ensuring smooth supply of sugar in January/February, 2014 to USC, Pakistan Army and other institutions. 

The Commerce Ministry is expected to hand over the case of powerful Punjab based sugar millers who obtained TCP tenders of a large amount by quoting the lowest price that enabled them to avail interest-free working capital but who did not deliver the commodity and caused a loss to national exchequer to the National Accountability Bureau. 

Copyright Business Recorder, 2013

Muhammad Ramzan Rafique
Muhammad Ramzan Rafique

I am from a small town Chichawatni, Sahiwal, Punjab , Pakistan, studied from University of Agriculture Faisalabad, on my mission to explore world I am in Denmark these days..

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