ISLAMABAD: The government on Tuesday allowed exports of 300,000 tonnes of sugar provided the industry maintains stable domestic prices.

The decision was taken at a meeting of the Cabinet’s Economic Coordi­nation Committee (ECC) presided over by Finance Minister Ishaq Dar.

The committee rejected a call for the export of 600,000 tonnes of sugar recommended by the ministries of commerce and industries. Instead it decided that sugar exports would be immediately stopped in case of abnormal increase in domestic prices.

The exports would entail no rebate or subsidy, an official said.

He said the finance minister had postponed the decision for sugar export about two months ago to avoid price surge in Ramazan as demanded by the Sugar Advisory Board (SAB), a body comprising the Ministry of Industries and Production (MoIP) and the sugar industry.

The official said sugar exports are allowed even now on the written assurance provided by Pakistan Sugar Mills Association (PSMA) that the instructions of the government regarding price stability of sugar will be adhered to in letter and spirit.

Shipments would be halted immediately in case of abnormal increase in domestic prices

The meeting was told that the ECC had allowed export of 250,000 million tonnes of sugar on Dec 28, 2016. On March 28, 2017, the ECC allowed an additional export of 200,000m tonnes of sugar up to May 31, 2017 subject to the condition that a committee constituted by the prime minister would immediately recommend halting further export to the ECC if domestic price stability – as prevailing on Dec 15, 2016 – was not maintained.

The above exports were to be completed within 60 days of allocation of quota or May 31, 2017 whichever comes earlier.

The PSMA again approached the commerce ministry on May 6 and reported to have produced a record quantity leading to a surplus of 1.475m tonnes, resulting in delayed payments to the sugarcane growers. It called for a meeting of the SAB for verification of overall availability and stock position of sugar and being allowed further exports.

The SAB meeting, held at the MoIP on May 17, 2017, recommended allowing exports of 1.2m tonnes sugar in view of the available surplus. An inter-ministerial committee meeting was held on May 25 and on its recommendations the ECC decided on June 7, 2017 decided to defer the sugar export in order to maintain the price stability during Ramazan.

It was decided that the matter be taken up in the last week of Ramazan with the direction that PSMA may be asked to express their “firm resolve in writing to maintain price stability”. The inter-ministerial committee reviewed the sugar supply and stock position again on June 20, 2017 and noted that the price of sugar in the domestic market remained stable which benefited the consumer.

The price in the domestic market according to the Sensitive Price Indicator (SPI) for the week ending June 15, 2017 was Rs56.30 per kg which was 1.1 per cent lower than the level of Dec 15, 2016 when the export of sugar was allowed by the ECC, it was noted.

The committee also observed that out of the total quantity of 0.425m tonnes allowed for export by the ECC, a total of 0.391m tonnes sugar quota had been allocated by Sate Bank of Pakistan (SBP) and around 0.348m tonnes had been exported.

The ECC decided to allow only 300,000 tonnes of sugar export and directed that the committee constituted by the prime minister to meet in the first week of every month to review sugar stock, export and price situation and recommend stoppage of further export to ECC.

It was also decided that export quota will be approved and monitored by the SBP on first come first serve basis and the exports would be completed within 60 days of quota allocation by the SBP.

Tax exemption approved

The ECC also approved a proposal of the MoIP to grant Belarus exemption from value-added tax as required under a provision of a proposed agreement between the Pakistani and Belarusian governments on industrial, scientific and technical cooperation.

Once the agreement is signed, both governments will mutually exempt value-added tax when importing goods supplied on cooperation base, as well as under grant-in-aid, an official statement said.

Published in Dawn, July 19th, 2017