Inland freight subsidy: Rs 500 million sought for payment to sugar mill owners

Commerce Ministry has approached Finance Ministry for the release of Rs 500 million for a corruption-tainted Trade Development Authority (TDAP) for payment to sugar mill owners as inland freight subsidy on export of 0.5 million tons of sugar. Commerce Ministry, in its report submitted to the ECC on October 2, 2013, requested the State Bank of Pakistan (SBP) to monitor the export of sugar in light of ECC decision. 

Official documents reveal that Ministry of Commerce and Textile Industry reported on September 24, 2013 that it had conveyed the ECC decision to the SBP, as the responsible entity, to monitor the export of sugar. A copy of the decision was also forwarded to all the stakeholders for their information. According to the Ministry, a public notice containing the decision has also been published in newspapers on 16th September, 2013 for the information and guidance of stakeholders. 

The documents further reveal that SBP furnished draft circular/revised draft circular, dated 23rd & 24th September, 2013 and the status of pending application to the Ministry of Commerce for views/comments. Ministry of Commerce furnished views/comments on the draft circulars on 24th September, 2013 and issued clarification on allocation of quota against the pending applications to SBP. Ministry of Commerce expressed surprise at the ECC decision of Rs 500 million subsidy and requested the concerned departments to furnish data on the sugar stock/export position on a weekly basis. 

As regards decision on inland subsidy, TDAP has been asked to take further necessary action for compliance of the decision of the ECC. TDAP”s top brass is already facing FIA over Rs 1.27 billion embezzlement in relation to the release of export subsidy. A couple of weeks ago, the ECC had allowed sugar mills to export a total of 500,000 MT tons of sugar out of which 250,000 MT was allowed to be exported with immediate effect up to 31st October, 2013; and the remaining quantity of 250,000 MT from 1 November, 2013 onwards. 

It was decided that sugar mill owners would clear the outstanding arrears of Rs 1.7 billion (as reported by the representative of PSMA), to be paid to growers. The ECC also set a condition that sugar mills will start crushing sugarcane in Sindh and Punjab by 1st November and 15th November 2013, respectively. 

Other decisions of the ECC are as follows: (i) sugar stocks position in the country should be reviewed on a monthly basis; (ii) quota should be allocated on ”first come first served” basis by the SBP; (iii) export should be made against irrevocable letter of credit or a contract with 25% non-refundable advance payment;(iv) shipment should be made within 45 days of the registration of contract with the State Bank of Pakistan, and the non-refundable advance payment to be forfeited in favour of GoP in case of non-performance; (v) SBP should arrange via its website for online submission of applications for quota by the sugar mills; and (vii) full disclosure of the record of quota allocation and its utilisation for the purpose of transparency be made so as to be viewed by the public. 

It is pertinent to mention here that Punjab-based powerful sugar mill owners who obtained TCP tenders of more than Rs 2 billion by quoting the lowest price that enabled them to avail interest-free working capital have been accused of failing to deliver the commodity on different pretexts. The TCP Chairman is said to be running from pillar to post to get the money back or sugar, but his efforts have so far not been successful. 

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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