ISLAMABAD: With Ramazan approaching, the government is unlikely to accept a request for three-month extension in sugar export period with increased subsidy.

A senior finance ministry official said the sugar industry was in contact with the ministries of industries and production and commerce seeking extension in sugar export up to June supported by increased subsidy.

He said the ECC had allowed Rs13 per kilogram subsidy on sugar export of 500,000 tonnes in December with the cut-off date of March 31. He said the Ministry of Industries had opposed sugar export and proposed diverting surplus stocks to the Utility Stores Corporation for sale to common people at cheaper rates.

The industry could export only about half of the permitted quantities by the deadline. Now, it wants the government to extend the deadline until June 30 and increase the subsidy to Rs20 per kg, up by Rs7 per kg. This was considered important to adjust for a recent further decline the commodity prices in the international market.

The ECC had given an understanding to the industry that relevant ministries would keep a constant watch on domestic sugar prices and more than 10pc increase in retail price would attract withdrawal of subsidy and export decision. That meant the sugar price should not go beyond Rs63 per kg.

Based on historic trend, the domestic sugar prices usually go up by 25pc before the advent of Ramazan because of greater consumption in the holy month. The industry wants to build on this trend and jack up domestic prices a little more ie Rs75-80 per kg.

Such an increase in the price is unacceptable to the government, said a senior official who has been involved in price monitoring committee of the federal and provincial representatives. “Despite strong pressures, the government particularly Finance Minister Ishaq Dar are price sensitive, more so on the eve of Ramazan,” he said.

It was in this background that the ECC in one of its recent meetings reported that sugar stocks were comfortable until November when new produce would start flowing with the advent to next crushing season in October.

The official said the ministries of commerce and industries and production, although have held a series of meetings with the sugar industry, they have not yet officially moved the case to the ECC. The industry wanted the summary to be moved urgently to the ECC even if it was not approved because this would give a surge to local prices.

In its meeting of Dec 7, 2015, the ECC had allowed 500,00 tonnes of sugar export with Rs13 per kg rebate. By the March 31 deadline, the State Bank of Pakistan is said to have reported about 255,000 tonnes of export that too mostly to Afghanistan. The export came to a halt on the deadline.

The government and the sugar industry are currently putting total stocks at 3.5 to 4.5 million tonnes as of now. This included 2.8 tonnes in Punjab, 1.85 million tonnes in Sindh besides some quantities in other provinces.

Published in Dawn, April 22nd, 2016