PESHAWAR, Jan 7: Flour mills in the NWFP cannot operate at full capacity due to provincial government's policy of reducing expenses under the head of subsidy on wheat and non-availability of the commodity in the open market of Punjab, according to business circles.

Most of the mills, sources said, were operating only for a couple of hours daily due to the shortage of wheat, and this situation was likely to worsen. Official sources said the provincial government had to reduce its annual bill of subsidy on wheat due to its loan agreement with the World Bank.

The government, according to official record, has already brought down its expenditure under the said head from Rs3,600 million per annum two years ago to around Rs950 million envisaged for the current fiscal year.

Market sources said provincial flour millers were neither getting enough wheat from the NWFP government because of its policy nor they were able to procure wheat from the open market of Punjab in this part of the year.

Mills, when contacted, said that not much wheat was available for sale in Punjab's open market because the bulk of stock had already been procured either by the government of Punjab or the millers in that province in the five month when the transportation of the commodity from Punjab to other federating units was prohibited.

Though the ban had been lifted over two months ago, NWFP's flour mills did not benefit from it because of non-availability of wheat in Punjab's markets. "No more wheat is available in Punjab's open market, so the belated move of Punjab to lift the ban is of no utility as far as NWFP's flour mills are concerned," said a spokesman for the NWFP chapter of Pakistan Flour Mills Association (PFMA).

The spokesman, when contacted on Thursday, said that provision of 900 ton wheat a day had added to the miseries of the millers. The province, according to official sources, had around 160 operational flour mills, majority of them in central districts, including Peshawar, Nowshera, Mardan, Charsadda and Swabi.

In accordance with the wheat distribution formula being pursued by the provincial government, operational flour mills were getting 25 to 36 bags of wheat weighing 100 kilogramme each daily, sources said.

Market sources said the quantity of wheat being provided to NWFP's flour mills fell short to help a mill carry out its operations for a longer period. "A mill needs 200 to 250 bags of 100 kilogramme every day to operate at full capacity, therefore several units are not operating for days due to the shortage," said a member of the PFMA.

The PFMA spokesman told Dawn that the provincial government was releasing 1,000 tons of wheat every day from its storehouses. In accordance with the criteria laid down by the federal government, he added, the province needed some 10,000 tons of wheat every day to fulfil its wheat requirements.

"Non-provision of sufficient quantity of wheat from the official stock has helped Punjab's flour mills to firm up their grip on NWFP's flour market as local mills have lost competitive value under the given circumstances," said a market source.