ISLAMABAD, Aug 31: The federal government is expected to allow duty-free import of another 50,000 tons of sugar through the Trading Corporation of Pakistan (TCP) and auction over 300,000 tons of official stocks to the private sector.

Informed sources told Dawn on Wednesday that the Economic Coordination Committee (ECC) of the cabinet has also been requested to ban sugar manufacturers from participating in the sugar auction and fix an indicative wholesale price of Rs23 per kg.

Prime Minister Shaukat Aziz will preside over the ECC meeting here on Thursday to take up a total of about 20 items including review of price indicators, supply situation of essential commodities and economic data.

The sources said a total of about 680,000 tons of raw and refined sugar had been imported so far or was still in the transportation stage during the current sugar season and felt that another 50,000 tons should be imported before the start of next season in October this year.

The sources said the auction would be held in the lots of 500 tons and more than two lots would not be given to one bidder.

Asked as to why the government was restricting the sugar mills from taking part in the auction of official stocks of sugar available with the TCP, the official sources said if the industry was allowed to participate, the objective of auction would be defeated because the industry would tend to manipulate the prices as they were already involved in cartelization.

A senior government official said the government felt that the auction of sugar and additional 50,000 tons of sugar would reduce prices in the market and the sugar mills would be forced to offload their stocks which they were hoarding for the time being to get higher prices.

He said the government has been asking the sugar mills to release their stock in the market but they kept on increasing the prices to the extent of Rs32 per kg but now it has decided to teach them a lesson as they would have to automatically reduce the prices and release their stocks before the next season.

He said the government had also prepared a contingency plan in case the mills tried to delay the crushing season. He added that the government would protect the growers but did not say how.

The sugar prices during the current year have increased from Rs21 per kg to a maximum of Rs32 per kg in the market despite a number of measures by the government, including huge quantities of tax and duty-free imports and sale of sugar through the Utility Stores Corporation at Rs23.50 per kg.