- Provincial departments in no position to act against interests of ruling political parties
Even after finding out that the sugar mills have formed a cartel, the federal government is in no position to take firm action against them due to a lack of legal remedy.
A report compiled by the Ministry of Industries (MoI) against the recent sugar hike has found that the reason for high sugar prices were the speculators [sugar mills] of the sugar, who were completely in-charge of the market in end July and were selling short for full August delivery.
According to official sources, the domestic sugar usage per month is estimated at 300,000 tonnes per month. If the price remained stable at Rs 46 per kg than the total sale would amount to Rs 13.8 billion but an increase of up to Rs 61 per kg made the amount swell to Rs 18 billion thus allowing the cartel to rob the consumers by Rs 4.2 billion during the last month.
According to sources, the federal government holds the opinion that it could not take action against the cartel because of the devolution of the subject to provinces. On the other hand, the provincial departments are in no position to act against the interests of their ruling political parties.
According to the report, sugar mills in Punjab as well as in Sindh are operating as a cartel and keeping the sales to a bare minimum, allowing very little to no lifting of sugar from the mills. The mills in Sindh are selling only 60 tonnes on a daily basis and have increased the prices.
According to reports, Pakistan this year has a surplus of 1.1 million tons of sugar and the production has reached a record level of 7 million tonnes this year, against an annual domestic sugar consumption requirement of 5 million tonnes. This fact should have kept the sugar prices relatively stable in the country.
Despite the industry’s best attempts, the exports have not picked up due to the high cost of production, and Pakistan has so far been able to export only 400,000 tonnes of sugar even though the government has enhanced the limit to one million tonnes. The commodity is being traded at $ 367 per tonne in the international market while Pakistan’s sugar could be exported at $ 450 per tonne.
According to reports, sugar mills especially in Punjab and Khyber Pakhtunkhwa (KP), in the first week of August, decided not to sell any sugar for 15 days and disallowed any lifting of sugar from the mills. Later, sugar mills in Sindh also followed the same.
This prompted an immediate reaction in the market where firstly the speculators, and then the wholesale dealers, entered the market to cover their short position which caused the price to hike up to Rs 61 per kg, and later on settled at Rs 58 and is currently being traded at Rs 52 per kg.
The military regime under General Ziaul Haq approved the Price Control and Prevention of Profiteering and Hoarding Act 1977, which came into force on May 25, 1977. The act authorised the federal government to regulate the prices, production, movement, transport, supply, distribution, disposal, and sale of the essential commodity.
The government could notify the price to be charged, or paid for any commodity at any stage or transaction. The Controller General of Prices and Supplies was authorised to fix price ceiling of essential commodities by notification.
However, the government under General Pervez Musharraf delegated the powers of Controller General of Prices and Supplies to the provinces. After the notifications of November 06, 2001 and September 14, 2006, the federal government authorised the provincial secretaries of industries’ departments, industries provincial directors and district coordination officers to exercise these powers. After the 18th amendment, the subject of price control stands devolved to the provinces.
