ISLAMABAD, May 20: Influential sugar barons — many of them having a political face — continue to maintain their monopoly as a complete ban on setting up new sugar mills in Punjab imposed during the Musharraf government has blocked new entrants to the vital industrial sector.
The ban remains intact for the sixth consecutive year, with no imminent signs of it being lifted. Legal experts believe that the ban is against the spirit of Article 18 of the Constitution which guarantees freedom to all citizens to enter into any lawful trade or business. According to them, the government under the law has the authority to regulate any industry by a licensing system, but cannot block open competition.
According to documents available with Dawn, a notification under the Punjab Industries (Control and Enlargement) Act, 1963, issued by the Punjab government in Sept 2002 placed a ban on establishment of new sugar mills and enlargement of the existing mills in Multan, Sahiwal, Vehari, Khanewal, Pakpattan, Lodhran, Bahawalpur, Rahimyar Khan, Bahawalnagar, D.G. Khan, Rajanpur, Layyah, Muzaffargarh and Okara.
In Sept 2003, the notification was amended to impose a complete ban on establishment and enlargement of mills in the province. It was re-modified the following month to keep the ban on setting up of new mills limited to the same 14 districts, but enlargement in the existing mills was allowed.
In April 2004, Toba Tek Singh was added to the list of districts facing the ban. This time enlargement in the existing sugar mills was allowed, except for those in Sahiwal, Pakpattan and Toba Tek Singh.
In Oct 2004, a ban was imposed again on establishment of new sugar mills, with no change in rules for enlargement.
In July 2005, the establishment of new sugar mills up to the capacity of 16,000 TCD (tons of cane per day) was allowed and the existing sugar mills were also allowed to enlarge their capacity up to 16,000 TCD.
In Dec 2006, a complete ban was placed on setting up new sugar mills and enlargement in the existing mills under a notification superseding the previous one. The notification has not been touched by any government over the past six years, with no imminent chance of the ban being lifted to allow fresh investment and promote competition in the sugar industry.
The Pakistan Muslim League-N dominates the sugar industry in Punjab, with about a dozen of its leaders, including its chief Nawaz Sharif, owning sugar mills. The Sharif family tops the list with nine mills — Abdullah Sugar Mills, Brother Sugar Mills, Channar Sugar Mills, Chaudhry Sugar Mills, Haseeb Waqas Sugar Mills, Ittefaq Sugar Mills, Kashmir Sugar Mills, Ramzan Sugar Mills and Yousaf Sugar Mills.
Kamalia Sugar Mills and Layyah Sugar Mills are the two others owned by PML-N leaders.
Other prominent political figures owning sugar mills in Punjab are: Chaudhrys of Gujrat (four mills), Jahangir Khan Tareen, former federal minister for industries and production and now PTI leader (two mills) and Haroon Akhtar Khan, Nasrullah Dareshak and Anwar Cheema (one each).
An official in the provincial ministry of industries said the government had the right to refuse establishment or enhancement of any industrial undertaking which was in contravention of public interest, ecology or any other law or rule.
Justifying the ban in Punjab, he said sugarcane was a highly water-intensive crop and needed 18-20 hours of irrigation for proper growth.
Pointing out that groundwater sources were already depleted, he said an increase in sugarcane cultivation area would only worsen the situation.
He said sugarcane crop nourished pests and bacteria and was detrimental to cotton crop which was the backbone of the country’s economy, with its value-added products contributing 60 per cent to foreign exchange earnings. He was of the opinion that proliferation of sugar mills in the province would adversely affect cotton production.
Barrister Muhammad Afzal, a legal expert, said a complete ban on establishment of sugar mills was a clear violation of the Constitution. He said it was a statutory obligation of the Competitive Commission of Pakistan to ensure competitiveness in commercial activities and corporate industry of the country. “The commission must act to stop abuse of dominant position in the market and anti-competitive set of rules that in no way can override constitutional provisions,” he added.
Mr Afzal recalled that the commission had come out with a policy note on a price fixing agreement between the All Pakistan Sugar Mills Association (APSMA) and the Ministry of Industries and Production signed in August 2009, saying that “implementation of such agreements under the auspices of the government manifests legitimisation of practices prohibited under the law. The commission is of the considered view that the government must not provide any patronage to anti-competitive practices and measures that in effect promote and encourage collusive behaviour on the part of sugar mills through the platform of APSMA”.
APSMA (Punjab zone) president Jawaid Kiani was not available for comments despite repeated contacts.