A FACE-OFF between a National Assembly standing committee and top bureaucrats over the subsidies worth billions of rupees, provided to sugar industry on exports by the previous government, has taken an ugly turn.

The committee considers the subsidy unjustified and gross misuse of taxpayers’ money and insists on taking action against those involved in what is being described as ‘subsidy scam.’ The subsidy, the committee contends, should have been provided to the farmers who are often not paid even the government-fixed price for their produce by the mill owners.

The ministry of industries is unwilling to send the subsidy case to the NAB as desired by the committee. If no action is taken by the government, warns chairman of the committee, Asad Umar, a former CEO of a leading fertiliser company, he will go to the court because ‘eighteen million people of the country have paid a price for allowing sugar export.’

The Economic Co-ordination Committee (ECC) of the cabinet on March 6, 2013, presided over by the then finance minister Dr Abdul Hafeez Shaikh, had approved an inland subsidy of Rs1.75 per kg on export of 1.2m tonnes of sugar. The total cost of the subsidy came to Rs8bn. The decision was taken on the summaries prepared by the commerce ministry and the FBR with the consent of the ministry of industries and production.

On March 17, 2014, the National Assembly’s standing committee on industries and production took serious notice of the issue and asked the secretaries of the ministry of commerce, and industries and production to send the case of sugar subsidy to NAB for a detailed investigation. But the chances of the two ministries handing over the record to the NAB appeared quite dim because the sugar lobby is seen politically powerful and the bureaucracy would not risk a confrontation with it.

Asad Umar says he had been asking the ministries concerned to produce the record of sugar subsidy in the standing committee meeting from the outset but have always found them reluctant to do so because, in his view, ‘big people’ were benefiting from the schemes approved by the ECC.

So, the ministry of industries would prefer to pass on the matter to the commerce ministry which had originally prepared the summaries for the ECC. Incumbent commerce minister Engineer Khurram Dastgir while sitting on opposition benches had also tried to seek an investigation into the ‘sugar subsidy scam’ during the PPP government but without any success. However, caretaker minister for commerce Maqbool Rehmatoola was able to put a ban on subsidy on export of sugar.

In a meeting on January 15, also attended by the representatives of fertiliser industry, the NA committee chairman sought details of benefits to fertiliser industries in the form of cheap gas and subsidy on imports of urea which he saw without any justification.

Additional secretary in the ministry of industries, Khizar Khan, admitted that the government “extends subsidy on imported urea but farmers do not get it at fixed prices.” According to him, the ministries of industries, finance and commerce are collectively responsible for deciding about matters relating to policymaking, export and subsidy and no single ministry can be blamed for allowing the subsidy.

Meanwhile, chairman of Punjab chapter of the Pakistan Sugar Mills Association, Riaz Qadeer Butt has, in a statement on April 16, demanded of the government to give them subsidy as is done by India to boost exports of sugar. He asked the government to announce a permanent mechanism for sugar export by fixing a limit.

Whenever the sugar production surpasses a particular limit, the sugar mills should be able to export surplus stock without waiting for government’s permission, he suggested. He said the millers fail to export the full quota of the sugar, due to several complexities including inconsistent policies.

In India, the government announced a subsidy of Rs3,300 per tonne on raw sugar exports on February 28 to help the cash-starved industry clear cane arrears and improve their financial position. But the move has angered a WTO panel. Some countries such as Australia, Colombia, Brazil and the EU have asked India to remove immediately the export subsidy, saying it distorts the global trade. The demand was raised in a meeting of the Agriculture Committee of the World Trade Organization (WTO) in Geneva.

Meanwhile, the Indian Sugar Mills Association (ISMA) said on April 17 that the delay in fixing the export subsidy by the government on raw sugar for the April-May period was adversely affecting shipments contracted earlier.

A Bloomberg report says that sugar output in India is set to climb for the first time in three years as the subsidy for raw sugar exports and abundant water have motivated farmers to increase planting. Production may gain 5pc to 25m metric tonnes in the harvesting season starting October 1.