Buzdar apprises commission of Punjab govt role in sugar crisis

Updated May 14, 2020

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Punjab Chief Minister Usman Buzdar appeared the commission of inquiry on the sugar scam at the FIA offices in Islamabad on Wednesday. — Photo courtesy Usman Buzdar Twitter
Punjab Chief Minister Usman Buzdar appeared the commission of inquiry on the sugar scam at the FIA offices in Islamabad on Wednesday. — Photo courtesy Usman Buzdar Twitter

LAHORE: Punjab Chief Minister Usman Buzdar on Wednesday appeared before the commission of inquiry on the sugar scam at the FIA offices in Islamabad and recorded his statement regarding the Punjab government’s role from the crushing season to the freight support and export subsidy of sugar in 2018-19 financial year.

Earlier, PML-N senior vice-president Shahid Khaqan Abbasi had appeared before the commission on Saturday and Federal Minister for Planning and Development Asad Umar had recorded his statement on the decisions taken by the Economic Coordination Committee (ECC) and the federal cabinet regarding sugar and its export on Tuesday.

The chief minister, it is learnt, replied to different questions by the commission. Sources told Dawn that Buzdar explained to the inquiry commission all details that how the issue of beginning of cane crushing got aggravated and in what circumstances subsidy/ freight charges were allowed.

Buzdar told the inquiry commission that the Economic Coordination Committee in its meeting held on Oct 2, 2018 allowed export with the condition that no subsidy/freight charges would be permissible. However, he said, neither export of sugar could take place nor crushing could start despite best efforts by the Punjab government. The chief minister also produced a Ministry of Commerce’s Oct 10 letter explaining decisions of the ECC.

He stated that a cabinet ministerial committee comprising four provincial ministers was constituted on Oct 30, 2018 to monitor and address the issues of sugar sector. The committee held a series of meetings and was also involved in consultation with all stakeholders — cane growers and sugar mill owners.

The chief minister said the sugar mill owners did not intimate probable date of start of crushing and the cane growers across Punjab grew restless because the cane crushing could not be delayed beyond Nov 30.

On the other, the chief minister stated the Pakistan Sugar Mills Association (PSMA) started a rigorous campaign in the print and electronic media expressing their inability to commence crushing season unless their demands were met that included freight subsidy for being competitive in the export market. The sugarcane growers and the Kissan groups started agitation and sporadic protests throughout cane growing areas of Punjab.

The chief minister said the ministerial committee engaged both PSMA and farmers to resolve their issues and they also called on him during these engagements.

Eventually, the chief minister said the crushing season in the province could not start by Nov 30 and the farmers in general and the cane growers in particular took to the street creating serious law and order situation. The protests and the backlash was all splashed in print and electronic media and the opposition political parties also tried to capitalise on the situation in the province.

Considering the plight of the farmers and worsening situation, the chief minister told the commission that he himself wrote a DO letter to the federal finance minister on Nov 30 for consideration of PSMA demands because their demands fell within the domain of the federal government – so that crushing season could immediately start in the province. The chief minister also acknowledged that pressure had mounted on the administration and political forces in the wake of dozens of protests.

The chief minister stated that the ECC meeting was called in Islamabad on Dec 4 where permission of export of 1.1 million MT was allowed without subsidy by the federal government and the committee allowed the provinces to determine subsidy, if deemed appropriate by them.

Still, the crushing season could not start in Punjab and a meeting was convened on Dec 6 and the food as well as agriculture ministers came explaining the crisis being faced by the sugar sector and farmers’ protests and demands.

The Punjab government’s committee then decided to place the matter of subsidy at the rate of Rs5.35 per kg before the cabinet committee for consideration and decision.

The chief minister told the commission that the Ministerial Committee on Sugar in its Dec 17, 2018 meeting recommended sugar export along with subsidy/ freight charges, with direction to the food department to move summary before the cabinet for subsidy.

Following this decision, the chief minister said a summary was moved by the food department on Dec 22 and the matter of subsidy and freight charges on export of sugar was placed as a regular agenda item in the Punjab Cabinet’s sixth meeting, held in Bahawalpur. The cabinet discussed the issue in detail and as per rules of business 2011 and in the light of Mustafa Impex Case decided by the Supreme Court, decided: “The cabinet considered and approved the supplementary grant of Rs3 billion during financial year 2018-19 for freight support/ export subsidy of sugar”.

In the light of this cabinet decision, Buzdar told the inquiry commission that debit authority was issued on Jan 10, 2019 to the State Bank of Pakistan under intimation to the ministry of commerce. On Feb 14, the chief minister said the commerce division clarified a few issues regarding subsidy to the State bank of Pakistan including eligibility of the provincial governments to provide freight support and also indicating that no limit was imposed on the export quota of the provinces.

During March last year, the chief minister said, a spike in the sugar prices in the province was witnessed. Therefore, immediately, on a summary moved by the food department, directions were issued to approach the ministry of commerce to appraise the prevailing situation and requesting to review the sugar export policy and sugar stocks.

In a nutshell, the chief minister said the subsidy/ freight charges in question initially allowed by the ECC were recommended by the ministerial committee on sugar on Dec 17, 2018, which were duly approved by the cabinet on Dec 29 because grant of subsidy was the exclusive purview of the provincial cabinet – and therefore authenticated/ ratified by the Punjab Assembly as part of the supplementary budget.

Published in Dawn, May 14th, 2020