Ban imposed on release of inland subsidy on sugar export

Pakistan Sugar Export
Pakistan Sugar Export

April 25, 2013


Caretaker Minister for Commerce and Textile Industry, Maqbool H H Rehmatoola has reportedly imposed a ban on release of inland subsidy on export of sugar as well as the subsidy under the Strategic Trade Policy Framework (STPF) 2009-12 and 2012-15, well informed sources told Business Recorder.

The Economic Co-ordination Committee (ECC) of the Cabinet, under the three-week long leadership of former Finance Minister, Saleem Mandviwalla, approved billions of rupees of financial incentives for politically influential sugar industry under the guise of inland subsidy on a summary moved by the Commerce Ministry.

However, the decision, considered questionable could not be implemented; several decisions taken by Saleem Mandviwalla are currently being heard by the Supreme Court of Pakistan. “Commerce Minister believes that the amount of inland subsidy can be used in elections, which is why he imposed a ban on the release of the amount under this head,” the sources added.

Likewise, processing of cases of release of subsidy to exporters as announced in STFP is to be discontinued by the Trade Development Authority of Pakistan (TDAP). The Minister feels that TDAP should not release any amount under that head as it would be considered against the directives of Election Commission of Pakistan. The officials in TDAP and Trading Corporation of Pakistan (TCP), who intended to expedite cases of sugar mill owners and exporters for release of subsides were likely to be disappointed with that decision, said an official on condition of anonymity.

The sources said ECC in its meeting on March 6, had approved inland subsidy of Rs 1.75 per kg on 1.2 million tons of sugar. Earlier, the ECC meeting presided over by former finance minister Abdul Hafeez Shaikh had approved Rs 8 billion incentives on export of 1.2 million tons of sugar on summaries prepared by the Commerce Ministry and the Federal Board of Revenue (FBR).

However, SRO issued by the FBR favoured only sugar mills of Sindh zone. According to sources, Punjab produces 60 percent and KP 10 percent of overall sugar output in the country. The exclusion of both provinces has been strongly lamented by the industry as the SRO only favours one province. This SRO is being challenged in the court as discriminatory in nature and the major quantum of growers” payments relates to Punjab. If KP and Punjab mills try to export through Karachi Port for destinations other than Afghanistan and CIS, it costs over 20 dollars in terms of haulage and it is practically impossible to export. According to sources, Secretary Finance Dr Waqar Masood has decided that the issue of release of inland subsidy should be left to the new elected government.`Source Business Recorder

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