KARACHI, March 26: Export of 37,000 tons of sugar to Indonesia in next few months is going to cost Pakistan’s taxpayers Rs250 million plus a price escalation in the local market.

At present sugar price in the domestic market is Rs19 a kilogramme, which is gradually crawling up with reports of flotation of the first tender for export of 12,000 tons by the Trading Corporation of Pakistan (TCP).

The TCP now plans to float another tender on Saturday for export of 25,000 tons sugar. Bulk of the quantity of sugar is going to Indonesia.

Market analyst fears that sugar prices in the domestic market will go up beyond Rs20 per kg after the flotation of second tender, and the flotation of third tender will push up sugar prices further.

Financial analysts estimate a subsidy of Rs5,000 to Rs6,000 on export of per ton of sugar, which would be picked up by the government to offset the “losses” of the sugar millers.

Bad management practices and primitive production techniques have made the sugar milling a pretty costly affair in Pakistan and, hence the necessity of giving a subsidy.

Not only that sugar export will cost government exchequer and hurt the domestic consumers, market analysts fear a shortage if the Iraq war lingers on for a long period.

Analysts say that export of 100,000 tons of sugar will cost government exchequer about Rs1 billion in subsidy and hurt the domestic consumers beyond their capacity to suffer price escalation.

Raees Ashraf Tar Mohammad, a leader of the Karachi grocery merchants, wants immediate suspension of the sugar export because Iraq war may prolong. He fears that there could be a serious sugar shortage in the domestic market and prices could flare up beyond Rs34 per kg as was witnessed in the year 2,000.