C
commander
Guest
Billions made as sugar prices reach all-time high
http://www.thenews.com.pk/top_story_detail.asp?Id=23845
Thursday, August 13, 2009
ECCs orders were mysteriously ignored, concedes Shaukat Tarin
By Kamran Khan
KARACHI: Ruthless manoeuvring by market players, actively assisted by important government personalities, has triggered a rapid escalation in sugar prices in Pakistan and if the trend continued, Pakistanis would be forced to buy sugar at a whopping price of at least Rs 60 per kilogramme in Ramazan against an already all-time high current sugar prices of Rs 52 per kg in Karachi markets, according to an investigation by this correspondent.
A calculated strategy hatched by key players of the sugar industry and trade, with secret but most effective help from important government personalities, undermined orders from the Economic Coordination Committee (ECC); manipulated decision-making at the Trading Corporation of Pakistan (TCP) over the last nine months and achieved a mischievous target of increasing the sugar prices in the country to an unimaginable level for profits in billions of rupees for some big names of sugar mills owners and traders, all tied with political families.
Interviews with TCP insiders and several sugar trade experts and official documents available with this correspondent showed that a game plan to stretch the sugar prices to a record level was made last year when Pakistan Annual Sugar Report 2009-10 forecast sugar production for the current year at 3.65 million tonnes against Pakistans sugar consumption of 4.35 million tonnes, hence a shortage of 7 lakh tonnes of sugar was expected. An advance knowledge of an expected significant sugar shortage provided an opportunity for the governments Economic Coordination Committee (ECC) to quickly bridge the gap by ordering import of refined and raw sugar under feasible tariff, a measure that would have kept the sugar prices to a reasonable level.
The ECC, under Shaukat Tarin, ordered the TCP to buffer its stock by importing 200,000 tons of sugar and desired that the process be completed rapidly, rightly guessing that sugar prices in the international market were to rise in coming weeks.
The same ECC meeting held on February 03, 2009 made another prudent direction to the TCP to release 100,000 tonnes of sugar from its stocks to utility stores so that a rising trend in sugar prices is arrested. Here entered the interested and politically wired sugar players: Powerful sugar mill owners and dealers who thrive on speculation of sugar prices knew that if implemented in letter and spirit the ECC decision would cap bright prospects of rapid increase in sugar prices and if these ECC decisions were somehow delayed their fortune from sugar trade would multiply several times.
The influence of these players in the official corridors played its role as on one side the TCP put in abeyance the ECC decision for a speedy 200,000 tonnes sugar import and withheld the release of 100,000 tonnes from its reserves to Utility Stores and on the other the ECC decided not to question the TCP aggressively on mysterious delay on part of the TCP in implementing the ECC decision for sugar import. Hence the ECC meeting held on March 12, 2009 held without TCP grilling for sidelining the earlier ECC decision, yet the ECC desired that its earlier orders for the release of 100,000 tonnes of sugar to Utility Stores at a price of Rs 34 per kg for sale at Rs 38 per kg must be complied. The measure was aimed at diluting an upward trend in sugar prices in local market.
What adds further mystery to this saga is an astonishing fact that this particular order of the ECC for release of sugar at a controlled price of Rs 38 per kg through Utility Stores has not yet been complied with as sugar prices in Karachi are a record Rs 52 per kg.
At the same time while the sugar prices continue to take an upward spiral, an essential sugar price import ordered in February, when the prices in the international market were at a moderate level, remained entangled with the TCP bureaucracy. Astonishingly, two separate TCP tenders floated in May/June for import of 50,000 tonnes of sugar each were abruptly scrapped by the TCP, giving a new push to ever-increasing prices of sugar. This was another example of the clout enjoyed by the sugar mafia.
Yes, this is a serious matter and in the ECC meeting held on Tuesday, we have ordered probe against TCPs violation of the earlier ECC decision, said Shaukat Tarin, the federal Finance Minister who presides over the ECC meetings. No doubt that TCPs gross violation of the ECC decision contributed to this huge rise in sugar prices all over the country, he remarked and went on to confirm my investigation that large stocks of sugar have been hoarded for incredible profits.
Tarin disclosed that he has been informed that instructions to the TCP to delay the ECC orders for sugar import and release of 100,000 tonnes from sugar reserve to Utility Stores came from another influential federal minister, but he refused to take name stressing that a probe has been ordered.
Shaukat Tarin said he had now instructed the TCP to implement the first ECC decision of releasing 70,000 tonnes of sugar each month to the Utility Stores for retail sale at a price of Rs 38 per kg. I can assure you that well make sure that sugar from Utility Stores reach the common Pakistanis and not to dealers who have already made fat profits, Tarin said.
Much before these clever moves were placed to ensure record high sugar prices in the country, the same lobby with strong government connection had made a strategic move in September last year when a suggestion for import of cheap raw sugar to plug a projected gap in supply and demand of sugar was turned down by the relevant government departments.
Sugar trade sources said while extremely short supplies are increasing sugar prices in the face of growing demand because of Ramazan, huge quantities of sugar is being hoarded by sugar companies and some major dealers in the name of advance sales and advance delivery orders.
They are keeping the stock for the beginning of Ramazan when the price will hit the sky and the hoarded stock will then be released for maximum profits, according to an informed trade industry source. Finance Minister Shaukat Tarin says this hoarding by some important players has caused a crisis situation for sugar prices in the country.
This is not the first time, though quantum of price manipulation in the current scandal is unprecedented, that a common Pakistani is pressed to pay inflated price for an essential commodity like sugar.
A similar scandal broke under the nose of the Musharraf government when the sugar prices touched the then peak of Rs 35 per kg. A NAB probe ensued against the political big wigs close to the Musharraf government. The NAB probe initially established the charges that politically connected sugar mills owners hoarded large stocks to manipulate the prices. The NAB probe was subsequently shelved on the personal orders of former president Pervez Musharraf.
The blame on this scandal has now shifted to sugar mills owners on the other side of the political aisle, but observers are sure that this scandal too will not be probed and crores of poor Pakistanis will pay more for their sugar in tea or beverage in the coming month of holy Ramazan.
