KARACHI, Jan 24: Three members of the federal cabinet are meeting in city either on Sunday or on Monday to bring about a reconciliation to the conflicting interests of the growers and sugar millers at the cost of tax payers money, which may amount anywhere up to Rs5 to Rs6 billion.

Market analysts estimate export of Pakistani sugar will cost anywhere up to Rs5 to Rs6 billion to the public exchequer. The federal cabinet had decided on January 18 to designate Trading Corporation of Pakistan (TCP) to procure sugar from the millers for export.

Sugar prices have already started crawling up in the retail market following the cabinet decision on January 18 last. Once the government comes out with a financial package for sugar export, possibly on Sunday or on Monday, the prices are expected to take a quantum jump in the local market putting further pressures on the consumers.

Well-placed sources in Sindh government disclosed that the Industries Minister Liaquat Jatoi, who represent the well entrenched feudals in the National and provincial assemblies and the Commerce Minister Humayun Akhtar Khan, a spokesman of the powerful millers are holding a joint meeting with Adviser on Finance Shaukat Aziz in Karachi.

Shaukat Aziz is expected to be in Karachi on Sunday and likely to meet his cabinet colleagues either same day or on Monday. The agenda is to work out a financial package for the sugar procurement and export. The National Bank of Pakistan is expected to give a revolving loan to the TCP at concessional rate.

The three cabinet members are expected to work out procurement quotas for individual sugar mills and the amount of subsidy to be offered to the millers. Sugar production cost in Pakistan is estimated at about 325 dollars to 330 dollars a ton. The current international sugar price is reported to be 220 to 225 dollars a ton. It roughly involves more than 100 dollars a ton subsidy which means about Rs5,800 to Rs6,000 a ton.

Former Prime Minister Nawaz Sharif has been indicted by the government for offering Rs4,500 a ton subsidy on sugar export during 1998-99.

In another development, the Sindh government is reported to have managed to persuade millers in Nawabshah and Khairpur to pay growers Rs43 on 40 kg of sugarcane. An arrangement reached between the millers and growers at a meeting on Sunday decided that millers will pay Rs40 to the growers at the time of receiving sugarcane. The balance amount of Rs3 will be paid later when government will provide financial relief to the millers.

The proposed financial package for sugar export will bring the budget under further pressure increasing the fiscal deficit beyond 5 per cent. How the government is going to offer explanation to the IMF for this increase in fiscal deficit will be an interesting event.

Ironically, the federal cabinet meeting on January 18 decided to offer Rs5 billion relief to 2.5 million families under a ‘falahi programme’. Each family will receive Rs2,500 a year or a little more than Rs200 a month. Hardly 100 rich sugar millers will get Rs5 to Rs6 billion subsidy and within a very short span of time.