NA body blames govt, SBP for sugar crisis

By A Reporter
Tuesday, 15 Dec, 2009

ISLAMABAD: The National Assembly standing committee on Commerce has observed that the government, ministries of industries and finance and the central bank are responsible for sugar crisis in the country.

The NA committee held its fourth meeting on Monday in the Parliament House, where the senior officials of the Trading Corporation of Pakistan and commerce ministry submitted their deliberations over the causes of sugar crisis.

Talking to media after the meeting Chairman of the committee Engineer Khurram Dastgir Khan said that the two main reasons for the 2009 sugar crisis were directives of the government to the TCP for cancelling the import orders in May this year, while the other reason was providing financial cushion to the sugar mills by the State Bank.

The committee noted that the decision by the ministry of industries to officially direct the TCP on May 29, to stop sugar imports provided a chance to the stockists to take undue advantage of the situation.

Eng. Khan said that the decision was taken against all odds, as the ECC had approved import of 200,000 tons of refined sugar despite the warning by the ministry of food and agriculture that Pakistan needed one million tons refined sugar in 2009.

‘Incidentally, the decision to stop sugar imports was made in the secretaries committee meeting without any intimation to the ECC,’ Mr Khan said, adding: ‘It shows sheer negligence of the policymakers or their connivance with the market manipulators.’

He said that the NA committee would further hold meetings with the finance ministry and the officials of the central bank for further investigations.

Based on discussions with various departments and the ministries, the committee noted that the circular BPRD No. 2 issued by the State Bank on Feb 09, gave financial leverage to the sugar mills to hold their stocks and manipulate the market.

The SBP circular directed the financial institutions that they should extend the recovery date of loans from the sugar mills from July 31, 2009 by three months to Oct 31, 2009.

‘Both the decisions by the government created a perfect situation for market chain to fleece the consumers,’ Mr Khan said, adding: ‘The committee feels that the government needs transparency and discipline in its decision.’

The NA committee meeting was attended by Liaquat Ali Khan, Tahir Aurangzeb, Shireen Arshad Khan, Hamid Yar Hiraj and Jamila Gilani.

Members said that the financial liberty and sugar shortage was the main reasons that many sugar mills refused to sell sugar to the TCP despite advance payments.

Responding to the queries raised by the members, Chairman TCP Saeed Khan informed the committee that the agreement made with the sugar mills in 2007 said that if the mills failed to provide sugar to the TCP, they would pay back the original amount and a 25 per cent penalty.

‘Now the sugar prices are so lucrative that the mills were paying the amount along with the penalty instead of supplying sugar,’ chairman TCP said.

The use of political influence by the government to get these two decisions can not be ruled out, members of the committee said, adding that many sugar mills are owned by the influential persons, who are active in politics and some are in parliament.

The committee observed that between Rs40 billion to 60 billion had been pocketed by the vested interest after increasing sugar prices.