LAHORE, July 6: Pakistan Sugar Mills Association (PSMA) has urged the government to build a strategic buffer stock of 500,000 tons of sugar by purchasing the commodity from mills at a price of Rs31 per kg to steer the industry out of crisis.

“The sagging prices of the sugar in the domestic market have led to a crisis in the industry. The procurement of the sugar by the Trading Corporation of Pakistan (TCP) can help the mills pay back the outstanding dues of the growers,” said Punjab Chairman of PSMA Chaudhry Zaka Ashraf at a news conference here on Friday.

Sugar mills have to pay an amount of Rs8 billion to the sugarcane growers. Of this, about Rs5 billion has to be paid to the farming community in the Punjab province.

Chaudhry Ashraf said that the sugar mills in the province were not in a position to start crushing in November this year due to financial constraints.

Referring to a recent meeting of PSMA delegation with secretary Planning Commission for power co-generation and the upcoming crushing season, he said that the PC had informed the PSMA that the government wanted to encourage the sugar industry to help it in overcoming electricity shortage in the country.

“Sugar industry can generate electricity by using bagasse as fuel during the crushing season and from furnace oil during the off-season as alternative fuel,” PSMA chief said.

He said that a committee had been formed with Secretary Planning Commission Asif Bajwa as its head for co-generation by sugar mills.

Sugar mills will be able to provide electricity to Wapda by the year 2009 if the PSMA and the government reach an agreement in this regard, he said. Every mill would have to invest about Rs2 billion to co-generate power.

Zaka Ashraf said that the addition of ethanol produced by sugar mills as a bye-product to the petrol could help cut down the petroleum import bill significantly.

“There is a need to take concrete steps by the policy makers regarding co-generation and the use of ethanol as motor fuel,” he said.

Responding to a question, he said that the country was expecting 4.5 million tons sugar production next year. To absorb this capacity, building of a strategic buffer stock was essential, he added.

Zaka Ashraf also called for establishing a sugar development board to take care of this sector exclusively. —APP