LAHORE, July 7: After the refusal of the mills to provide sugar at discounted rates, the Punjab government has decided to purchase the sweetener at the market rate of around Rs35 per kilo for its distribution among the poor at a subsidised rate of Rs25 per kilo under its sasti cheeni scheme.

“We shall provide a targeted subsidy of Rs10 on a kilo of sugar to some 565,000 listed poorest, zakat-deserving families across the province,” a senior provincial government official told this reporter on Friday.

He said all district coordination officers (DCOs) had already been intimated and told to make arrangements for the implementation of the scheme in their respective districts.

The provincial government had set aside Rs250 million in the budget for providing subsidy on sugar to the zakat-deserving families. The scheme was due to be launched on Saturday as stated by chief secretary Salman Siddique in the post-budget press conference last month. However, the actual distribution of subsidised sweetener to the poor was likely to be delayed for a few more days as the DCOs were yet to make arrangements for the implementation of the scheme, said another official.

The subsidy being offered to the needy families on sugar was in addition to Rs750 million allocated in the budget for the current year for the provision of subsidised wheat flour to the zakat-deserving people.

The provincial government had announced the provision of the sweetener to the poor earlier this year when the sugar rates touched the record high of Rs48-50 per kilo owing to its short production and rising international prices.

In order to implement its scheme, the government had approached the millers and asked them to provide some 10,000 tons of sugar at Rs25 per kilo for the sasti cheeni scheme. The idea was to purchase the sweetener at discounted rates and sell it to the poor and the needy at a further subsidised price of Rs20 per kilo, thus offering a subsidy of Rs5 per kilo instead of Rs10 per kilo that the government would have to bear after the mills’ refusal to the government’s request.

The millers, however, conditionally agreed to sell sugar to the provincial government at discounted rates. In return, they demanded that the Punjab government approach the federal government to waive sales tax on the sweetener to be sold to the province at discounted rates. They also asked the provincial government to convince the federal government to refrain from intervening in the market to force the prices down so that they could make up for their losses that were to be incurred because of the sale of the sweetener at the discounted rates to Punjab. This primarily meant that the federal government should instruct the central bank to withdraw its order to commercial banks to adjust the (working capital) loans obtained by the mills against the security of their sugar stocks by July 31, and repeal notices issued by the Monopoly Control Authority to several mills for their failure to release their stocks. The federal government had taken these measures to force the mills to bring down their prices.