Agro Perspectiva

Pakistan. MoIP and MoF responsible for simmering sugar crisis?

05.07.2010 12:42 "Agro Perspectiva" (Kyiv) — The Ministry of Industries and Production (MoI&P) and the Ministry of Finance (MoF) are said to be responsible for the simmering sugar crisis and its continuously increasing price as officials dealing with sugar issues are unable to realise the limits of Trading Corporation of Pakistan (TCP), well-informed sources in Industries Ministry told Business Recorder. Additionally powerful lobbies of importers and corruption are also negatively influencing the implementation of the decisions being taken by Cabinet and the Economic Co-ordination Committee (ECC). For instance, the government issued instructions to the TCP in December to import 1.2 million tons of sugar in February, which is practically not possible. It is pertinent to note that whenever TCP opened a tender for 200,000 tons of sugar, no party showed interest in importing more than 50,000 tons except Al-Khaleej, a Dubai-based refinery which is also out of stock now, the sources added. The sources revealed that sugar cannot reach Karachi Port before 16–18 weeks from countries like Brazil and there is no sugar in Thailand and Dubai. A high-powered ministerial committee under the chairmanship of Minister for Industries, Mir Hazar Khan Bijarani has been given the task of suggesting measures to avoid looming sugar crisis especially in Ramazan, which will fall in August. The sources said the TCP Chairman has been strongly criticised both by the Cabinet and the ECC for not meeting the February deadline of importing 1.2 million tons of sugar and a number of participants were not aware of the import procedure. TCP has imported only 0.4 million tons of sugar against the tenders of 725,000 tons so far because of procedural delays. The government was expecting the remaining 0. 7 million tons will reach Karachi by June 30, 2010 but this has not happened. A couple of weeks ago the TCP Chairman, in a letter to the federal government had sought Rs 26.3 billion for import of 374,000 tons of sugar and 0.4 million tons of urea. On January 12, 2010, the ECC of the Cabinet had assigned TCP the task to import 1.2 million tons of white sugar. This was decided while reviewing sugar policy presented by the Ministry of Industries & Production (MoI&P) and the figure of 1.2 million tons was arrived at by estimating the gap of total production and consumption. The decision was reinforced by the ECC in its meeting on June 8, 2010. Sources said the TCP started the process but was slow in implementing it in the beginning, which actually helped the country in procuring at relatively cheaper prices due to decline in international prices. The TCP has so far awarded contracts for 825,000 tons sugar. The weighted average import price is $595, or Rs 53,297, per ton, which comes to Rs 53.50 per kg. The highest procurement was at $779/ton, and the lowest $488/ton. The Letters of Credit (L/Cs) have been established for 575,000 tons against which sugar has started arriving and so far TCP has received 150,000 tons sugar, while 150,000 tons of sugar is in the pipeline, for which ETAs have been received to reach Karachi by end-June, 2010. The balance of 275,000 tons is being arranged by suppliers to be loaded at ships and is expected to reach by end August 2010. This would complete the import of 575,000 tons sugar. The ECC on June 8, 2010 directed TCP to complete the balance assignment of 375,000 tons sugar through tenders to achieve the total quantity of 1.2 million tons of import of white sugar, as per original decision, sources said. According to sources, though this was pointed out to the ECC, yet instructions were to continue to import through tenders as per original decision, which requires re-tendering in June 2010. Accordingly, one tender of 100,000 tons was floated in June to be awarded in July to complete the assignment. The TCP Chairman was not available for comments.