National media sources have reported that in the recent Economic Coordination Committee (ECC), Finance Minister Shaukat Tareen has asked the Ministry of Finance to arrange PKR18 billion, or $110 million, for the previously approved sugar import.
This money is required for the import of 200,000 metric tons of sugar, which according to the government is being imported to build strategic reserves.
The Ministry of Industries and Production sought the committee’s approval on four different proposals including that the Trading Corporation of Pakistan (TCP) may be allowed to import 200,000 metric tons of sugar for strategic reserves out of already approved imports of 500,000 metric tons with all applicable Public Procurement Regulatory Authority (PPRA) exemptions;
Secondly, it proposed that Utility Stores Corporation (USC) purchase sugar from TCP to hold strategic reserves either at its TCP godowns or if required at private warehouses (which will be selected following PPRA rules and doing cost comparison with TCP warehouse facility).
It is worth mentioning that sugar would be imported in a consignment of 25,000-50,000 metric tons with a gap of up to two weeks in between consignments meaning that storage needs may actually be less than anticipated at this time;
Thirdly, MoI&P proposed allocation of Rs 18 billion for import and storage of sugar for 3 months approximately (calculated on the basis of the landed cost of the last tender floated by TCP) and warehousing cost by TCP.
The ministry also requested the Finance Division to arrange forex of US$ 110 million for the import of 200,000 metric tons of sugar.
Reportedly, the ministry of industries informed the committee that due to the lack of time, the comments of the relevant stakeholders were not sought regarding the matter earlier, however, they were welcomed to put forward any contentions during the meeting.
As the deadline of seven days prior to the meeting, as stipulated in Rule 18(6) read with Rule 23(4) of the Rules of Business, 1973, was not adhered to due to the urgency, the Cabinet Division could not examine the summary.
The proposals were agreed upon by the Ministry of Finance as the overarching argument of building strategic reserves for the basic needs of a common man was put forward by the ECC chairman, business recorder reported.
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The sugar import would allow the government to build reserves as a countermeasure for the speculative elements in the local market. The committee decided that in case of future requirements the reserves can be replenished by importing more sugar as well.
After strenuous discussion on the matter, the ECC approved a modified version of the proposal stating that the Finance Division shall provide the amount required for the import of 200,000 metric tons of sugar through a supplementary grant or through some other financial arrangement.
The previous discussion on the matter that came to light was on 16th July, when ECC approved the import of 200,000 metric tonnes of sugar as part of the plan to keep strategic reserves.
The discussion on the topic of import began on 28th June when the Economic Coordination Committee was informed that imported sugar would cost approximately Rs104 per kg against the current retail market price of Rs98 per kg.
It was then that Finance Minister Shaukat Tarin allowed the import of 100,000 metric tons of sugar after ECC was informed about the apprehensions that speculative pressure would start destabilizing the domestic market much before the arrival of new sugar in the market.
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Thus, in compliance with the decision of the NPMC, a tender for the import of 100,000 metric tons was floated through the Trading Corporation of Pakistan (TCP).