In a meeting chaired by Finance Minister Ishaq Dar, the Economic Coordination Committee (ECC) of the Cabinet decided on Wednesday to allow the sugar mills to export 225,000 tonnes of sugar, that will help maintain the prices of sweetener at higher level in the country, an official source said.
Pakistan is expected to have a bumper sugar production of estimated 5.6 million tonnes of sugar this year due to high sugarcane yield. At present the prices of sugar are ranging between Rs 70-75 per kilogramme as compared to the international prices equivalent to Rs 40-45 per kilogramme.
The government has maintained higher sugar prices domestically by jacking up the import duties and further imposing regulatory duties to curb any attempts to import the sweetener in the country.
The ruling party has huge stakes in the sugar business. According to unofficial estimates, the higher sugar prices have led to consumer paying more than Rs 300 billion additional for the commodity during the last one year.
An official statement issued after the ECC meeting said the ECC decided to allow export of 225,000 tonnes of sugar from the surplus available after ascertaining that there would be 1.23 million metric tonnes of surplus sugar available in the country.
ECC also decided that the Ministry of Commerce must ensure that there are adequate checks and balances to maintain the price stability in the domestic market at the current level.
Interestingly the sugar production subject is dealt by the Industries Ministry and sugarcane by the Ministry of Food Security, both were kept out to get favourable support from the sugar mills, the source said.
In case the domestic price stability is disturbed, the Ministry of Commerce would bring summary to consider cancelling the export permission to sugar exporters. Unlike previous years, it was decided that there will be no freight or export rebate payable by the government to sugar exporters on such exports.
Furthermore, only those mills will be allowed to export which have cleared outstanding dues of farmers relating to the last season and have started crushing at full capacity.
The meeting approved the proposal of the Ministry of Petroleum regarding allocation of additional 50 MMCFD available gas from Habib Rahi Limestone (HRL) reservoir to Thermal Power Station Guddu (TPSG/GENCO-II) subject to installation of the compression plant by TPSG/GENCO-II and allocation of additional up to 26 MMCFD available gas from HRL reservoir to Engro Fertilizer old plant for continuation of the plant.
ECC recommended the proposal of the FBR for extension of the period of applicability of existing reduced withholding tax rate of 0.4 percent for non-filers of income tax returns from 1st January 2017 to 31st March 2017.
The Finance Division apprised the ECC that the State Bank of Pakistan’s (SBP) principal debt amounting to Rs 54.460 billion outstanding against Zarai Taraqiati Bank Limited (ZTBL), as on December 31, 2015, is being converted into redeemable preference shares carrying a profit of 7.5 percent per annum, redeemable in 10 years in one bullet payment on December 31, 2025.
In this regard, the ECC approved issuance of guarantee of Rs 54.460 billion by the Government of Pakistan in favour of the SBP for principal debt of the preference shares and returns thereon.