ISLAMABAD, July 11: The government is considering to buy around 50,000 tons sugar from the mills at market price to help them in reducing the surplus stocks.

Well-placed sources told Dawn that the proposal is being under consideration following the demand made by Pakistan Sugar Mills Association (PSMA) seeking temporary bridge financing for sugar export.

According to the sources, the sugar will be exported to Afghanistan under suppliers credit.

President, Pervez Musharraf during his visit to Kabul had promised that Islamabad would give half amount in cash as promised for the reconstruction of the Afghanistan and the remaining amount would be in the shape of supplies of various commodities — cement, sugar, wheat, etc.

The sources, however, said that PSMA has sent a proposal to the commerce ministry seeking Rs6,000 as loan per ton on sugar export.

According to the proposal, the amount would be provided to the mills during the July-October period of current financial year on sugar export.

The amount will be reimbursed in the shape of taxes at a rate of 20 paisa on per kg sugar during the crushing season, said the sources.

Commenting on the proposal, senior officials in the commerce ministry, confirmed that the proposal was received from the PSMA, however, they said it was not workable.

Elaborating further, the official said that only few mills were exporting sugar out of around 65 mills, while the proposed tax will be levied across the board.

The officials said that the tax would not only affect the other mills but they would easily pass on the impact to the end consumers.

The officials said that according to their estimation around 200,000 tons sugar were lying surplus with PSMA.

They said that if the government decided to buy 50,000 tons sugar from the millers it would help them overcome the sugar glut.

Moreover, the officials said that Ramazan was falling in the November this year so for that we would be needed surplus sugar, while in case surplus sugar was exported, we needed to import sugar for domestic consumption in Ramazan, the officials said.