Islamabad: Even after establishing that the sugar mills have formed a cartel, resulting in an increase of Rs 14 per kilogram, an estimated gain of Rs 4.2 billion from unsuspecting consumers in August alone, the federal government is in no position to take a firm action against the cartel due to the lack of legal remedy.
A report compiled by the Ministry of Industries against the recent sugar hike has found that the reason for high sugar prices were the speculators (sugar mills) in the sugar market who were full 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 tons per month. If the price stayed stable at Rs 46 per kg then the total sale worked out to be Rs 13.8 billion but the jack up to Rs 61 per kg made the amount swell to Rs 18 billion. The cartel robbed the consumers Rs 4.2 billion in last one month.
The federal government, source said is of the opinion that it could not act against the cartel of sugar mills due to 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.
The report says mills in Punjab as well as in Sindh are running a cartel and keeping sugar sales to bear minimum and allowing very little to no lifting of sugar from the mills. The sugar mills in Sindh are selling only 60 tons on daily basis. They jacked up the sugar price from Rs 46 per kg to Rs 61 per kg in a matter of few days.
It is important to mention that Pakistan this year has a surplus of 1.1 million tons of sugar. The production reached a record level of 7 million tons this year against an annual domestic sugar consumption requirement of 5 million tons. This fact should have kept the sugar prices stable in the country.
Despite the industry’s best tries, the exports have not picked up due to the higher cost of production. Pakistan has so far managed to export 400,000 tons of sugar even though the government has enhanced the limit to one million tons. Sugar in the international market is being traded at $367 per ton while Pakistani sugar could be exported at $ 450 per ton.
The report says mills especially in Punjab and Khyber Pakhtunkhwa in the first week of August, decided not to sell any sugar for 15 days and made a cartel disallowing any lifting of sugar from sugar mills, which was later on followed by the sugar mills in Sindh.
This action prompted an immediate reaction in the market where firstly speculators and then the wholesale dealers entered the market to cover their short position which lead the market to rise to Rs 61 per kg and later on settled to Rs 58 per kg and currently traded at Rs 52 per kg.
The military regime under General Zia-ul-Haq, notified the Price Control and Prevention of Profiteering and Hoarding Act 1977 that came into force on May 25, 1977. The act authorized the federal government to regulate the prices, production, movement, transport, supply, distribution, disposal, and sale of essential commodity.
The government could notify the price to be charged or paid for any commodity at any stage of transaction. The Controller General of Prices and Supplies was authorized to fix most prices of essential commodities by notification.
However, the military regime of General Pervez Musharraf delegated the powers of Controller General of Prices and Supplies to the provinces. In terms of notifications of November 06, 2001 and September 14, 2006, the federal government authorized the provincial secretaries of industries department, provincial directors of industries and district coordination officers to exercise these powers. After the 18th amendment the subject of price control stands devolved to the provinces.
