Sugar reform committee asks FBR to reconcile data with provinces, CCP to curb cartelisation

ISLAMABAD: The sugar sector reform committee has directed the Federal Board of Revenue (FBR) to reconcile sugar stock data with the provinces and the Competition Commission of Pakistan (CCP) to update on the CCP’s action against cartelisation in the sugar industry, a national daily reported.

The second meeting of the sugar sector reform committee, chaired by the minister for industries and production, discussed the issue of cartelisation within the sugar sector. The minister inquired if any action had been taken according to Sugar Policy 2019-2020, in addition to the import of sugar through the Trading Corporation of Pakistan (TCP).

The joint secretary (PSD) said that no such action had been taken according to the Sugar Policy 2019-2020 as the policy dealt with intervention in the provinces, and hence, post 18th amendment it was not implemented. The minister floated the possibility of deregulating the sugar sector as a result of which the domestic market would be pegged to the international prices of sugar and sugarcane.

CCP Chairperson pointed out that Thailand abolished support price of sugarcane in 2017. The chair directed to look at best international practices, including those in Thailand. The joint secretary (PSD) was asked to prepare a paper on it before the next meeting.

The chair in particular inquired about the legal actions that the government can take in the event the sugar mills do not start crushing in time. Under the Sugar Factories Control Act, 1950, a fine of Rs10,000 can be imposed, which has been increased to Rs50,000 in Punjab.

The minister noted that due to lack of enabling instruments, provinces feel constrained if crushing does not start in time. Moreover, under the Sugar Factories Control Act, 1950, crushing can start at any time from October 1 till November 30. He also noted that the time range during which crushing can start was too wide and this also needed to be looked into. The veracity of the data on stock position provided by the sugar mills to the Provincial Cane Commissioners also came under discussion.

The chair inquired, if the provinces had any mechanism in place to ascertain, if the data provided by the sugar mills was correct. In this regard, the secretaries of government of Sindh and the Khyber-Pakhtunkhwa stated that they had no such mechanism in place.

The secretary, Food Department Punjab stated that they conduct physical verification that was certified by deputy commissioners and third-party evaluation was conducted by the Urban Unit. Secretary Agriculture Sindh said if the federal government developed a mechanism in that regard they were willing to amend their laws accordingly.

The minister inquired about the legal instrument under which the Punjab government conducted physical verifications. Secretary, Food Department Punjab cited the Hoarding Ordinance and Sugar Factories Control Act 1950.

Secretary Industries Department of Khyber-Pakhtunkhwa stated that the Sugar Factories Control Act 1950 empowers the Cane Commissioners to the extent of sugarcane, and not the finished product; his view was endorsed by the representative of the Law Division.

The chair also asked the provinces to look into the possibility of reconciling stock data with the Federal Board of Revenue (FBR). FIA Director General stated that the Godown Registration Acts, which have been enacted in Punjab and Sindh, and in draft stage in the Khyber-Pakhtunkhwa are also a possible enabling instrument for government to conduct physical verification of stocks. He said that physical verification was a very difficult exercise in practice and due to lack of capacity and influence of mills owners, the government was constrained.

The following decisions were arrived at in the meeting of the sugar sector reform committee: DG FIA will deliver presentation on findings of inquiry committee on sugar next meeting; the Competition Commission of Pakistan (CCP) will deliver presentation on their findings on cartelisation in the sugar industry and the CCP’s jurisdiction to take action; the provinces will share details about the law under which licenses are issued to sugar mills, terms and conditions of licenses and enforcement mechanism in case of violations with the joint secretary (PSD) before the next meeting; and the Law Division will share information about what emergency powers can be invoked by the government at the next meeting.

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