ISLAMABAD, May 23: The government on Wednesday suspended the export of wheat with immediate effect, following protests from flour mills and the Sindh government over a sudden surge in prices blamed on hoarders and speculators.

According to an official statement, the decision to suspend wheat export was taken after a detailed review of the wheat situation in the country at a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Prime Minister Shaukat Aziz.

The suspension came after the Sindh cabinet sought an immediate ban on wheat export to keep flour prices under control. The provincial government alleged that exporters had started large-scale purchases, pushing prices of the new crop to Rs1,155 and Rs1,175 per 100kg.

This was causing problems for the provincial food department in meeting the procurement target. There are reports that flour prices have gone up by Rs80-100 per 100kg bag in Karachi.

The prime minister said the country had a record wheat crop this year and the increase in prices was ‘totally unacceptable’. “Hoarding of wheat and manipulation will not be tolerated.”

The ECC asked the provincial governments to monitor the supply and price situation closely.

Food and agriculture secretary Ismail Qureshi told Dawn that about 400,000 tons of wheat had been exported. The government’s export target was 800,000 tons for the current season. He said the government had to suspend the export because of reports that prices had increased unreasonably in Karachi and some other places.

When asked if the suspension would also apply on the wheat export which was already in the pipeline, he said genuine buyers would not suffer, adding that it should not be seen as “a ban on the wheat export”.

He said that current carry-forward stocks stood at five million tons and this year’s wheat output was expected to be more than 23 million tons. This means that there would be an overall surplus of about 1.5 million tons this year.

The ECC reviewed the overall energy supply and demand situation in the country. It was informed that loadshedding would continue “not only this season but next year as well”.

According to sources, the meeting approved recommendations of the ministry of water and power to give more ‘relaxation’ to independent power producers (IPPs) to attract investment.

They said that IPPs would now be allowed to get their profits in euro in case of devaluation of the US dollar and introduction of force majeure clause in their contracts in case of fuel shortage, instead of sovereign guarantees.