KARACHI, March 1: Sugar industry in the Peshawar valley is on the verge of collapse owing to increased production of gur (sweetner) by commercial manufacturers in un-organised sector. The growing demand from markets across the border in Afghanistan and Central Asian Republics (CRAs) is encouraging gur production, industry sources said.

Over 0.1 million tons of white refined sugar being produced by four units in Peshwar area for the last many years has declined drastically to 6,000 tons as most of the sugarcane grown in the area is being consumed by mechanised crushers for producing gur.

The Pakistan Sugar Mills Association (NWFP zone) has taken up the issue with the federal government seeking immediate remedial measures to save the sugar industry in the organised sector, which also contributes towards national kitty by paying sales tax and income tax.

There are nine sugar mills in the NWFP out of which four are located in Peshawar valley and five in other areas like Bannu and Dera Ismail Khan. However, due to proximity of area with the Afghan border, units operating in Peshawar valley are being deprived of sugarcane supply as gur manufacturing is gaining momentum.

Industry sources told Dawn that a large number of commercial manufacturers of gur had cropped up in the Peshawar valley and presently, around 95 per cent of the sugarcane cultivated in the area is diverted to these crushers who do not pay any tax.

Against this the industry has to pay 15 per cent sales tax and 35 per cent income tax as well as the road cess.

The industry has alleged that the ministry of commerce during 2006-07 had opposed the ECC decision to impose 15 per cent duty on export of gur on the pretext of seeking approval of the NWFP government. As a result of this gur prices increased to Rs50 per kg, which was previously being sold at Rs20 per kg because of unbridled exports.

In order to control the soaring prices of sugar during 2005-06, the ECC had imposed 15 per cent regulatory duty on its exports and as a result prices declined from Rs50 to Rs30 per kg because the federal government does not require approval from the provincial government to regulate import and export.

Iskander M Khan, chairman PSMA (NWFP zone) told Dawn on telephone from Peshawar that the industry was taking up the issue with the federal government as there is no justification, whatsoever, to destroy organised sector by giving free hand to un-organised sector, which does not contribute a penny towards the national kitty.

He further said that growing production of gur at the cost of sugar industry was causing numerous problems as well as losses to the country’s economy. Citing an example, he said that last year owing to sugar shortfall the country had to import sugar worth $57.8 million and this could have been averted if entire sugarcane cultivation in the Peshawar valley would have been consumed by the mills and not by the gur makers.

Similarly, he said, that the CBR is losing huge revenue to the tune of Rs900 million on account of sale tax and income tax whereas the provisional government is suffering a loss of Rs10 million on account of road cess. Furthermore, Mr. Khan said that there was also foreign exchange loss to the level of $3.3 million as there is no export of molasses.

He alleged that the tax free mechanised gur producers employ low paid seasonal workers, whereas, the sugar industry employs 4,000 permanent employees catering for 27,000 family members.

Under given circumstances he said that workers in sugar industry of this area were on the verge of losing their jobs as the industry could no more sustain huge losses.

He urged the government to immediately comply with the ECC decision to tax gur makers, which is being resisted by the ministry of commerce and save the industry in the organised sector, which pays taxes and also saves foreign exchange spent on import of sugar in the event of shortage created by higher production of gur.