ISLAMABAD: The federal government caved in to the demands of sugar barons on Tuesday, who enjoy the backing of Pakistan Tehreek-e-Insaf (PTI) stalwart Jahangir Tareen, and allowed them export of 1.1 million tons of sugar by waiving conditions that a cabinet body had imposed just two months ago.
It was the first major retreat by the PTI government that too succumbed to the pressure, like its predecessor, exerted by the influential sugar barons who had sympathisers in every political party.
“On a proposal of the Ministry of Commerce, relating to the export of sugar, the Economic Coordination Committee (ECC) of the cabinet waived the condition relating to the start of crushing season on November 15,” said an official handout of the finance ministry. Finance Minister Asad Umar chaired the ECC meeting.
Moreover, the committee also relaxed the condition that defaulters of banks and growers could not export sugar, said an official who attended the meeting. The issue had remained stuck for the past two months. PTI’s former secretary general Jahangir Tareen influenced the ECC’s decision through a federal secretary, claimed government sources.
The ECC gave concessions to the millers without finalising first the new date for the start of crushing season. The finance minister requested Adviser to Prime Minister on Commerce Abdul Razak Dawood to settle remaining issues with the millers and then announce the decision at a press conference, according to the officials.
During the ECC meeting, Minister for Railways Sheikh Rashid Ahmed was unable to stop the ECC from taking the decision, added the officials.
Two months ago, the ECC allowed the export of sugar on the condition that the millers would start crushing from November 15. But the powerful Pakistan Sugar Mills Association (PSMA) has still not begun the season.
Had the ECC not waived the condition, the millers would not have been able to export sugar. The delay in initiating sugarcane crushing has created problems for the growers who are waiting for cultivating the next crop – wheat. The federal cabinet, last Thursday, directed the ECC to resolve the issue. The ECC then constituted a committee headed by Adviser to Prime Minister on Commerce Abdul Razak Dawood.
The committee recommended the ECC to waive the condition of starting the crushing season on November 15, exempt domestic sales of one million tons of sugar from sales tax, increase the export limit from 1 million to 1.1 million tons and release Rs2 billion worth of freight subsidy arrears.
The finance ministry handout stated that the ECC observed that the matter relating to freight support for exports fell within the domain of respective provincial governments. With regard to outstanding claims of previous years, the committee directed the Finance Division to release the budgeted amount.
The ECC also enhanced the export quota from one million to 1.1 million tons. The ECC did not take decision on a proposal to give Rs4.7 billion in subsidy to Fatima Fertilizer and Agritech in order to facilitate both the factories in selling 50kg urea bag at Rs1,712.
Fertiliser producers have hiked the prices after the federal government increased gas tariffs for them. At that time, the finance minister vowed to stop the fertiliser producers from increasing prices of their products.
The handout only stated that the ECC discussed a report submitted by the Ministry of Industries to ensure the availability of urea and the possible impact on its price of the use of RLNG due to the shortage of system gas in winter.
The ECC putt off decision on a summary of the commerce ministry which sought release of withheld refunds, repayment of claims on account of PM’s Export Incentive Package and duty drawback claims. The summary had been moved as part of efforts to enhance exports. The finance ministry was required to pay Rs39 billion in subsidies on this account.
The finance ministry also opposed the summary on the grounds that it did not have sufficient budgetary allocations to meet these demands.
The ECC allowed the allocation of up to 30 mmcfd of gas from Zafir field, Sanghar district, to Sui Southern Gas Company (SSGC). The ECC approved the allocation of 66 mmcfd of Mari Deep Gas to Mari Petroleum Company for setting up 180-megawatt combined-cycle power plants.
Published in The Express Tribune, December 5th, 2018.