MoF refuses to provide funds for procurement of sugar from mills

The Ministry of Finance (MoF) has refused to allocate funds for the purchase of sugar citing financial constraint, reported Business Recorder.

Earlier the Ministry of Industries and Production (MoI&P) had proposed the government to purchase sugar from sugar mills as a strategic reserve.

According to MoI&P it had informed the Economic Coordination Committee (ECC) in February that the federal government should purchase 0.3 million metric tons of sugar, while the provinces Punjab and Sindh were advised to purchase 0.1 million metric tons of sugar each. This procurement was to be made from sugar mills from the current bumper crop. The main requirement for this procurement was to keep a strategic reserve in the country.

Further it was proposed by MoI&P that sugar should be purchased from the market when prices are low. The purchase of 0.3 million metric tons of sugar for the federal government was to be done in a phased manner by Pakistan Agricultural Storage and Services Corporation (PASSCO) and by Trading Corporation of Pakistan (TCP). The purchase was to be financed by the finance division.

In a meeting with the finance minister it was revealed that PASSCO and TCP do not have the required storage capacity to store and maintain the quantity of sugar.

In addition, the finance division stated that the provinces should bear the cost of sugar and it refused to provide funds citing financial constraints as a reason.

In an answer to this the finance minister, Shaukat Tarin, said that credit from commercial banks can be obtained for the purchase of sugar and the finance division will pay for the interest charges.

The finance minister directed TCP to make the required procurement and stressed on keeping a strategic reserve of sugar.

In the meeting it was decided by the ECC that TCP will purchase the required 0.3 million metric tons of sugar for which cash credit limits will be provided by the finance division. TCP will store the sugar in government and private warehouses. Costs associated with the purchase such as transport and storage will be paid by the government.

In case of provinces MoI&P will issue directions and both Punjab and Sindh government will purchase 0.1 million metric ton from their own resources. It was decided that the provinces will maintain the strategic reserve as required.