Scandalous details of how Punjab approved sugar subsidy

ISLAMABAD: Subsidy of Rs3 billion for the influential sugar industry was already a decided matter and the Punjab cabinet was merely used as a rubber stamp to formalise it.

Documentary evidence and background interactions reveal some serious illegalities and unbelievable facts involved in the approval of the Rs3 billion subsidy by the Usman Buzdar government. While at least three summaries of the then secretary Punjab Finance Department- all opposing the subsidy were under consideration at the chief secretary’s office- Chief Minister Usman Buzdar convened a cabinet meeting in Bahawalpur for the first time on December 29, 2018. The cabinet meeting had a heavy agenda but it did not include the item of sugar subsidy. During the meeting, the food minister came up with a surprise agenda item, seeking approval for Rs3 billion subsidy for the sugar mill owners. Neither the summary was circulated among the cabinet members before the cabinet meeting nor it was tabled there.

It was also a shocking surprise for the Punjab secretary finance, who was present there. The secretary finance had already moved three summaries opposing the subsidy but all in a strange situation were pending before the chief secretary when the Food Department bypassing all brought the issue before the cabinet as an ex-agenda.

Normally such summaries are brought before the cabinet following the approval of the chief minister. In this case, none of the three summaries of the finance department had even reached the CM’s desk and were facing a delay in the chief secretary’s office that the Food Department directly approached the cabinet to get its approval for the sugar subsidy. By doing so it ensured that the matter remains a surprise even for the provincial ministers. However, the minutes of the cabinet meeting show that the Food Department and Chief Minister Usman Buzdar were on the same page and had already decided how to go about it.

While the finance secretary’s three summaries, all opposing subsidy, were under consideration at the chief secretary’s office, Usman Buzdar held a meeting on December 6, 2018, and decided to give Rs3 billion sugar subsidy. The 9th cabinet meeting was merely a formality to stamp the decision already taken.

Interestingly the minutes of December 29, 2018, meeting of the Punjab cabinet even expose the alleged scheme.

According to the minutes, “Secretary Food briefed the Cabinet that provision of subsidy on export of sugar was discussed in a meeting held under the Chairmanship of Chief Minister on 6th December 2018 in the light of verbal information on decisions of ECC dated 04.12.2018. It was resolved that rate of freight support/ export subsidy on export of sugar may be maintained at the level of share of subsidy (Rs5.35/kg) shouldered by Government of the Punjab during the year 2017-18. It was also resolved that total volume of export freight/ subsidy shall not exceed Rs3.0 billion.”

The minutes also show the secretary food while referring to a meeting of cabinet committee on sugar (which too was headed by Buzdar) dated December 17, stating that the committee had deliberated upon the food department’s proposal of Rs3 billion subsidy and “resolved that export limit from Punjab province may be restricted to 0.572MMT (Rs3 billion)”.

When the food minister and food secretary were giving this briefing to the cabinet for the smooth sailing of the subsidy decision already taken, the shocked secretary finance Punjab silently approached the chief secretary (who was also attending the meeting) and insisted that he should be allowed to present his view as was reflected in the pending three summaries.

The chief secretary let him speak his mind and as per the minutes of the cabinet meeting, “Secretary Finance informed the Provincial Cabinet that the issue of excess production of sugar was a national issue and the Federal Government used to share subsidy on export with the Provincial Governments on 50:50 basis. The latest decision of the ECC would have detrimental impact on Punjab’s finances as now there would be no sharing and it would become a precedent for all time. He further informed that the subsidies were considered economic distortions and should not be encouraged especially where the impact on eventual beneficiaries, i.e. farmers, was not clearly established. He advised that the Provincial Cabinet should order formulation of a policy and plan for gradual elimination of subsidy since it was not a staple diet like wheat.”

The chief minister ignored the finance secretary’s view and decided to back the food department’s proposal, which had already been endorsed by him twice before the cabinet meeting.

The other cabinet members had no chance to read the proposal before the cabinet meeting. The three summaries of the Finance Department were also not allowed to reach the cabinet members. Consequently, the cabinet served as a rubber stamp and approved what was already decided.

Chief Minister Usman Buzdar was in such a hurry that without waiting for even the minutes of ECC decision on sugar subsidy, he had relied on verbal information and held the meeting on sugar just two days after the ECC had met in Islamabad.

While the official files on sugar subsidy were experiencing strange and suspicious maneuvers, all those matter in the Punjab bureaucracy were fully aware of those who were pressing Buzdar to get it done.

On Tuesday last, this newspaper has already reported another possible criminality missed by the FIA Inquiry report into the Sugar scam. The News reported that the then federal secretary commerce Younis Dhaga had moved a summary containing calculation based recommendations that no subsidy was due on export of sugar.

On the basis of the said summary, the ECC as well as the federal cabinet approved secretary commerce’s recommendations but the Punjab government turned a blind eye to these approved facts and allowed Rs3 billion subsidy.

In the presence of secretary commerce’s recommendations, approved by the ECC and the cabinet, the Punjab government decision to pay subsidy to Sugar mill owners is considered a seriously illegality.

The Punjab government had allowed subsidy of Rs5.35 per kg and a total amount of Rs3 billion was allocated on the export of sugar. The Punjab government was providing subsidy for export of sugar at a time when the price of sugar was increasing in the domestic market.