LAHORE, Jan 28: Sugar manufacturers have opposed imposition of duty on export of molasses, a by-product of sugar industry used to produce ethanol, because it will harm the industry and jeopardise payments to growers.

“Ethanol manufacturers are trying to paint a gloomy picture about availability of molasses to get a duty imposed on export of molasses,” said Javed Kayani, chairman, Pakistan Sugar Mills Association (PSMA-Punjab), after an emergent meeting of the body on Wednesday.

He further stated that 82 sugar mills in the country are producing two million tons of molasses which is more than the requirement of about 18 distilleries in the country.

“In fact, ethanol manufacturers want to cartelise purchase of molasses to deprive sugar mills of extra revenue,” he said, adding the government would lose export revenue by discouraging export of molasses.

He said funds retrieved from sale of molasses were used for payment to cane growers because molasses was the major component of sales.

“Therefore, restriction on export of molasses would jeopardise payments to growers.”

Moreover, he said, the government should not impose duty on export of molasses until blending of ethanol with petrol was made mandatory.

Mr Kayani said at present prices of crude oil have gone down below $50 a barrel.

“Therefore, export of ethanol might not be a lucrative proposition that was why the Association of Ethanol Manufacturers wanted to purchase molasses on their own terms and conditions through an exploitative arrangement.”

Prime importers of molasses, he said, are major European countries where the product is used for cattle-feed.

He said most of the sugar mills were GMP (Good Management Practices) complaint and they hade made major investment to keep molasses free of contamination to meet International Quality Standards.

“It will be highly unreasonable if government accepts demands of ethanol manufacturers who delay payments for 90 to 120 days against the sale of molasses whereas sugar industry can get prompt payments by exporting the product.”

Mr Kayani said manufacturers were also concerned about import of sugar as discussed by the ECC.

He said the government should restrict import of raw sugar as the price was likely to be manipulated by traders.

The government should only import white sugar through the Trading Corporation of Pakistan and keep it as buffer stocks against the sale of sugar through the network of Utility Stores to maintain matching quantities.

He said that the government should keep control of price dynamic with the TCP as it was being done in the case of wheat and cotton.

“The bench mark should be followed for the cost of sugar production because the industry is buying sugarcane at Rs125 per 40kgs due to its shortage.

With high financial costs and mark-up rates of 20 per cent, it has become very difficult to even recover the cost of production. Hence, duty on import of sugar at a level commensurate with local production should be introduced to restrict unscrupulous traders to destroy the market as interest of the growers should be kept the foremost,” he said.