LAHORE: Sugar millers fear default on payments to sugarcane growers and government because of fixing sweetener price below its production cost while the commodity is still unavailable in the market contrary to the claims of the authorities.

The Pakistan Sugar Mills Association, Punjab Zone, in a letter to Federal Industries and Production Minister Hammad Azhar on Tuesday said most mills might face default on bank loans, payment to growers, sales tax, income tax and other government dues because the industry is heading towards a crisis-like situation.

The reasons being, it claimed, higher production cost as they purchased sugarcane at a rate of up to Rs350 per kg against the official price of Rs200 per kg because of the alleged manipulation by middlemen as warned by the millers in an earlier letter in November last year and the ministry had refused to intervene. This shot production cost up to Rs105.77 per kg, whereas the Punjab government is lifting the sweetener from the mills at Rs80 per kg under the Ramazan package, the communique said.

“…would like to bring to your kind notice that due to price fixation of Rs80 per kg only by the Government of Punjab in the country, all sugar mills of Punjab have gone into an utter financial disadvantage.”

The millers argue that the province needs only 30,000 tonnes of sugar for ensuring price stability during Ramazan but regret that the government is lifting 150,000 tonnes of the commodity for the purpose.

PSMA in letter to minister portrays ‘crisis-like’ situation

This gap has given the investors incentive to get registered for quota allocation and black market the subsidised sugar in Punjab and also smuggle it to other provinces, it claimed.

Seeking a meeting with Mr Azhar to discuss the price and quota issues, the association has also drawn his attention towards supply chain management as no sugar is being sold other than to dealers registered by the Punjab government.

It says that tax recovery notices worth billions of rupees are also being issued to sugar mills by FBR, whereas NAB and FIA are also holding inquiries against them.

The millers also wish to discuss pending cane payments for sugarcane supplied by farmers as a provincial law requires them to pay the dues within two days of the purchase through formal banking channels and mark-up on delay in the payment.

On the other hand, sugar remains missing from most outlets as the government is carrying out its crackdown [in the province] on hoarders and against the complaints of sale of the sweetener against the officially fixed retail price of Rs85 per kg.

The Lahore district authorities claim that they have supplied 800 tonnes of sugar to registered dealers in the city.

Admitting that complaints of overcharging are being received by them, focal person Shahid Abbas says the government has launched a crackdown at retail level to check overpricing. He says around 150 cases have been registered for overcharging during the last two days, urging the consumers to inform the authorities about violation of the government directions on the sale of sugar.

Aftab Butt, a sugar dealer at the main city market, says the government is supplying too less than the requirement of the commodity following the advent of Ramazan from Wednesday (today).

Published in Dawn, April 14th, 2021