National Assembly Standing Committee on Industries and Production on Tuesday portrayed Pakistan Sugar Mills Association (PSMA) as a “powerful cartel” and recommended the government withdraw export subsidy on sugar until mills start selling sugar to the Utility Stores Corporation (USC) at reasonable rates. The panel headed by Asad Umar of PTI also recommended the government to include airbags and Antilock Breaking System(ABS) in automobiles in the lowest slab of customs duty so that local assemblers can fix them in cars to ensure safety of passengers.
Besides the chairman of the committee, Minister for Industries and Production, Ghulam Murtaza Khan Jatoi, Mian Abdul Manan MNA, Isphanyar Bhandara MNA, Syed Imran Ahmad Shah MNA, Secretary Industries and Production, Arif Azeem and Acting Managing Director, USC, Sultan Mehmood spoke on the issue of non availability of sugar in utility stores and reluctance of sugar mills to sell sugar to USC. He said crushing season 2015 will be notified within a couple of days.
Secretary Industries said that USC’s losses have increased after the USC was unable to procure sugar from the mills as sale of sugar in USC outlets is directly linked to sale of other items. He said NAB has completed the inquiry and nothing untoward was found.
There was a consensus amongst the committee members and officials of the MoI&P including USC that mills are reluctant to sell sugar to the USC because the latter deducts sales tax and withholding tax from purchases.
Secretary Industries said that the USC has floated 11 tenders from September 9, 2014 to September 22, 2015, which were scrapped because the rates offered by the mills were high vis-à-vis the market. Acting Managing Director USC informed the committee that the management also telephoned the sugar mills individually and added that “God knows better why mills are avoiding selling sugar to USC” despite the fact that the Corporation clears the payment within 24 hours.
According to acting MD USC, sugar millers believe that the old sugar procurement mechanism will be resumed in which TCP procures sugar from the mills and stocks it in their godowns. In reply to a question, he further stated that all the relevant documents regarding sugar tenders have been submitted to the Competition Commission of Pakistan (CCP).
After hearing the arguments of Secretary Industries and Acting Managing Director, USC, Chairman Standing Committee said that what he understands is that mills have no issue in selling their sugar to the private sector for a better margin but are not ready to sell to the USC which is a government-owned corporation. Isphanyar Bhandara, MNA, argued that mills may be selling sugar “off the books” in the open market and in case they sell sugar to USC, taxes will be charged from them. Mian Abdul Manan who is also from treasury benches claimed that sugar is released from the mills without payment of withholding tax.
On this issue, Secretary Industries said “if mills sell sugar to USC, they will have implications of withholding tax and sales tax”.
Acting MD USC requested the committee to allow USC to procure sugar directly from mills on “negotiation basis” sans PPRA rules. He further pointed out that there are groups within the sugar millers. A tussle between the Board of Directors (BoD) of USC and Ministry of Industries and Production with respect to the appointment of a permanent chief of the corporation was also witnessed in the committee meeting with the board recommending sacking two top officials who had blocked pocketing of Rs 80 million by sugar millers’ cartels.
“Board of directors of USC has made three attempts to appoint a permanent head of the corporation and it increasingly appears as if they are looking for an ‘Einstein’ to fill this post,” said secretary industries Arif Azeem. The Board had rejected the name of Rizwan Bhatti.
Responding to a question regarding recommendation by Board to remove two top officials involved in sugar procurement, he said that board had recommended to terminate one official and sent another one on forced retirement which was totally illegal. USC board in its meeting held on November 19 had recommended the removal of Senior General Manager Human Resourced and chairman procurement committee Masood Alam Niazi and General Sugar procurement Sagheer Ahmad from the post as they had refused to procure sugar at higher rates from sugar mills. Secretary further said that Sultan Mahmood was holding acting charge for second tenure and had also held acting charge earlier.
Minister for Industries Murtaza Khan Jatoi said that board had advertised post of permanent Chief Executive Officer (CEO) three times and wanted to advertise it for the fourth time. It was also revealed that six departments under Industries Ministry had no permanent head and were being run through acting chiefs. Parliamentary panel recommended filling these posts as early as possible.
Auto sector Member committee Abdul Manan disclosed that 50000 accidents occur per annum and 13000 became disabled due to poor safety standards by auto manufacturers in the country. The committee was informed that it was mandatory globally to ensure safety measures in cars but local auto manufacturers were not taking this into consideration. It was revealed that Honda Civic and Toyota Atlas had air bags but no other cars had such safety features. It was also revealed that prices could go up in case of installing air bags in cars.
A senior official of Engineering Development Board (EDB) Ijaz Ahmed said that it was an urgent need to revise motor vehicle rules to ensure safety of people. The committee recommended placing cars on priority list of Pakistan Quality Control Standard Authority to ensure safety of the people.
Asad Umar said that local car manufacturers were making double the profit due to higher duty on imported cars. He said that duty should be reduced on imports of safety related material. Car-makers are delaying delivery of cars for two months, a tactic to make money from the consumers. Ministry of Industries Minister Murtaza Jatoi said that the government was going to announce incentives for smaller cars in the new policy to provide relief to consumers. He said that measures would also be announced in new auto policy to ensure safety of consumers.
Ghulam Murtaza Khan Jatoi told the committee that the new auto policy which is yet to be approved by the ECC will have more incentives for small cars and new investors. The committee expressed annoyance at different Ministries and departments for not implementing their recommendations. Mian Abdul Manan maintained that if the decisions of the committee are not implemented, they have no interest in attending the meetings and using official cars.