KARACHI, June 2: Massive export of gur to Afghanistan and Central Asian Republics (CARs) for manufacturing of alcohol has not only created acute shortage of white refined sugar in the country but also caused huge revenue loss and foreign exchange spending on import of sugar.

On strong demand from Afghanistan and CARs, the gur prices have shot up to Rs45-Rs50 per kg compared to sugar which is available in the range of Rs35-Rs38 per kg.

Pakistan Sugar Mills Association (NWFP Zone) chairman Iskander M. Khan told Dawn on telephone from Peshawar that during current season sugar mills in Peshawar valley produced only 8,000 tons of sugar against their capacity of 150,000 tons.

This was mainly due to lack of enforcement of taxation on commercial gur manufacturing and trade, he said. “Against this there are heavy taxes on sugar production which includes 15 per cent sales tax, 35 per cent income tax and 6 per cent road cess,” he added.

During 1970s and 1980s, he said, gur manufacturing was under cottage industry in the Peshawar valley and only small fraction of sugarcane was utilised to produce gur and the rest by the sugar mills.

However, Iskander said that the situation reversed when gur became one of the essential ingredients for manufacturing of alcohol, which resulted into setting up of heavy and mechanised gur production facilities as there was no levy of sales tax, income tax, and road cess.

He alleged that as a result of this lopsided taxation policy during the 2005-06 crushing season a very large sugarcane crop was diverted towards tax-free gur production for export.

The PSMA chief said gur was now being produced at large-scale by engaging heavy mechanised power crushers and had now assumed the status of medium-scale industry and was no more a cottage industry.

He said the huge gur export had its toll on the economy as it had contributed in widening of the trade deficit by $75 million on import of sugar, the CBR had suffered loss of sales tax and income tax to the tune of Rs600 million and Rs100 million, respectively, and the NWFP government had been unable to generate road cess of Rs40 million.

He said that PSMA appreciated the levy of 15 per cent export tax on sugar to check the rising prices of the commodity. However, the association was surprised that the same had not been applied on the export of raw sugar and gur export.

The imposition of export tax on gur, he said, would increase sugar production and help bringing the prices further down. Mr Khan said that gur manufacturers were using industrial chemicals such as soda instead of food grade chemicals.

Mr Khan said that unfortunately the mechanised crushers only extract 50 per cent juice from the sugarcane compared to 95 per cent by the mills, this represent that, the sugarcane burned to produce gur consisted of 100,000 tons of sugar.

He said that India had managed to ensure supplies of sugar at reasonable prices to its citizens by enforcing their Gur Control Act and now it was one of the major producers and exporters of sugar. He said at the 10 most influential gur traders were presently having full control over the sugar market and its prices without paying any single penny towards taxes.