ISLAMABAD, Dec 30: With looming sugar crisis due to estimated 8 lakh tons of sugar surplus, the government has called an emergency meeting of sugar industry on Tuesday following their decision to close down sugar mills in Sindh.

Meanwhile, the Pakistan Sugar Mills Association (PSMA) Sindh chapter has refused to attend the meeting in Islamabad until Sindh government withdrew its notification relating to premium on quality sugarcane.

The PSMA Sindh had earlier sent an SOS to President General Pervez Musharraf and Prime Minister Mir Zafarullah Khan Jamali to save the industry from collapse as a result of Sindh government “arbitrary decision” to impose premium on quality sugarcane.

A senior government official told Dawn that Minister for Industries and Production Liaqat Ali Jatoi was directed to meet the sugar mill owners personally and tackle the situation that could also affect the coming wheat crop.

Accordingly, the minister has convened the emergency meeting of sugar industry on Tuesday. The meeting would also discuss promulgation of revised draft ordinance for the establishment of sugar development fund on the recommendation of PSMA.

The government is expected to constitute a committee comprising two federal secretaries and chairman Central Board of Revenue and four provincial chairmen of PSMA.

According to PSMA calculations, a new tax of about 22 paisa per kg would have to be imposed to set up the sugar development fund for the export of one lakh tons. The industry wants to export at least 5 million tons this year to avoid a sugar price crash at home, the sources said.

They said that Rs7 per kg rebate should be provided on sugar export. The minister for industries was expected to take the industry representatives to the prime minister’s adviser on finance to resolve the question of rebate and sugar export on Tuesday.

The sugar industry sources said the industries minister had decided to fix sugarcane price at Rs43 per 40 kg last week and agreed to meet sugar industry’s demand for sugar export of up to 3 lakh tons by providing rebate on export.

They alleged that the decision was violated by the Sindh government when it issued a notification fixing the minimum sugarcane price at Rs43 per 40 kg but at the same time imposed premium. Resultantly, the per 40 kg sugarcane price went upto Rs45, the sources said.

As compared to this, minimum sugarcane price for Punjab stood at Rs40 per 40 kg and without any premium. The result was that ex-mill sugar price has dropped to below Rs18 per kg, they said.

They said that Sindh sugar mills decided on Saturday to close down their mills immediately because while the crisis was resolved in consultation with the federal government, the Sindh administration issued a completely different notification.

These sources said that total sugar production was expected to be around 36 lakh tons this season while consumption for the remaining 10 months was slightly over 27 lakh tons. This meant that over 8 lakh tons of sugar would be surplus by end of the year.

The industry sources said they were also perturbed over threatening attitude of the cane commissioners in Sindh to arrest them in case of mill closure.