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Ministry opposes further export of sugar




  • Ministry of Industries and Production (MoI&P) has strongly opposed further export of sugar over and above already approved quota of 0.5 million tons, reveals official documents available with Business Recorder. Ministry of Commerce (MoC), which intends to submit a summary to the Economic Co-ordination Committee (ECC) of the Cabinet, had sought comments from the MoI&P on three proposals ie sugar export, strategic buffer stock and power co-generation. 

    Commenting on the proposal of Commerce Ministry, Muzammal Pasha, Cost Accountant, MoI&P, has stated that in the meeting of Sugar Advisory Board (SAB) held on November 12, 2013, a surplus sugar stock equal to 0.667 million tons was predicted for the season 2013-14 after taking into account, local consumption equal to 4.8 million tons and sugar export equal to 0.5 million tons already under process. He maintained that surplus sugar should remain in the country to ward off against emergency shortage and resulting price hike. 

    “The decision to allow further sugar export may be taken at the end of sugar season in September-October 2014 when actual figures regarding sugar production, stock and consumption patterns for the season 2013-14 will be available,” Pasha added. Ministry of Industries and Production, however, has supported other recommendations of PSMA with respect to sugar export policy. 

    Ministry of Industries and Production has also supported the maintenance of sugar buffer stocks equal to 0.5 million tons, subject to the availability of sugar stock in the country. MoI&P has apprehended that sugar stocks in the country will not be enough to meet the domestic needs of 4.8 million tons, maintenance of buffer stock by TCP (0.5 million tons) in addition to the normal procurement by TCP for supply to the USC and sugar export of one million tons as recommended by PSMA at the same time. 

    Ministry of Industries and Production has recommended that sugar industry should be facilitated for power co-generation, as it will not only meet the energy needs of the country but will also attract the investment of approximately $3 billion. Sugar mill owners through the Commerce Ministry have urged the government to allow export of one million tons of sugar through a subsidy which would reflect international market realities. The export policy should be realistic in a way that it does not have any unnecessary conditionalities which will impede export. 

    It was suggested that as during the last crushing season 2012-13 approximately 1.2 million tons of sugar was successfully exported, the same policy should be maintained with necessary improvements. The following features have been recommended in the Export Policy: (i) export policy should not be time bound; (ii) same export incentives as given in 2012-13 may be allowed in letter and spirit; (iii) export through Afghanistan and Central Asian Republics should also be entitled for FED rebate as major export of Punjab and KPK takes place in this region. Such export is entitled to inland freight subsidy also; and (iv) industry will be happy to sit with SBP and Commerce Ministry officials to fine-tune the Export Policy. 

    In order to stabilise the industry and enable it to invest in cogeneration plants, it is essential that the government sends out a message to the market that it will make all-out efforts towards stabilising the industry and ensuring a level playing field ie, address the current year”s supply demand mismatch. 

    The first two cogeneration plants (totalling 52MW) are due to be commissioned by March 2014 for which tariff determined by NEPRA is Rs 10.41 which is one of the cheapest tariffs available at present. The industry maintains that if it is given a level playing field, it has the potential of producing and supplying to the national grid a total of 2,500MW of electricity within the next 5 to 7 years. This will entail an investment of about $2.5 billion ($1 million per MW), all of which will contribute to economic growth. In addition, all mills that get into cogeneration will perforce have to undertake steam economy and plant efficiency which will directly increase annual investment in the entire sector. The industry foresees an investment of half a billion dollars for this purpose as well. 

    A total investment of approximately US $3 billion would take place in just one sector rising to $40 billion in 30 years. The direct benefit of adding 2500MW electricity can be achieved within a short span of 5 to 7 years. Another significant benefit of Cogeneration is that the fuel used is indigenous and renewable which at present is being wasted by using obsolete technology. 

    Copyright Business Recorder, 2014

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