The sugar and wheat inquiry reports have exposed poor governance structure existing in our country. Political influence in the tenure of Pakistan Tehreek e Insaf remains most relevant and it has once again surfaced with the recent crisis. The PTIs main slogan for election campaign had been ensuring meritocracy in all spheres of governments.
The sugar and wheat inquiry reports have exposed poor governance structure existing in our country. Political influence in the tenure of Pakistan Tehreek e Insaf remains most relevant and it has once again surfaced with the recent crisis. The PTIs main slogan for election campaign had been ensuring meritocracy in all spheres of governments.
After completion of report by Inquiry Commission, they are currently undertaking forensic audit to ascertain the money trail and it will also help in establishing whether the sugar was really exported or just showed as exported to pocket money from taxpayer’s national exchequer. It all might have long term political repercussions for the PTI led government.
The Inquiry Report done by FIA officials along with assistance of other departments on Sugar exposed political influence of ruling elites and demonstrated that three major beneficiaries for obtaining subsidy on exports were all towering political personalities. PTI leader Jahangir Khan Tareen, a brother of Federal Minister Makhdom Khusro Bakhtyar and Monis Elahi are among the top beneficiaries of the sugar crisis.
The inquiry report also sheds light on the decision of allowing export of sugar that also resulted in increasing prices of sugar in the domestic market taking it went up from Rs 55 per kg to Rs 71 per kg to the height of Rs 78 per kg. So these sugar mill owners pocketed both through export subsidy as well as earned profits from domestic consumers.
Out of a total subsidy on export of sugar of Rs 2.47 billion, three major beneficiaries earned the major chunk of it by pocketing Rs 1.419 billion or 57.49 percent out of the total subsidy amount.
The companies owned and controlled by Jahangir Khan Tareen (DW) and JK (Colony) II exported 17.24% of its total production and availed 22.71% of the total export subsidy amounting to Rs. 561,037,418.
The companies owned and controlled by Mr. Shamim Ahmed Khan (Al-Moiz Group) exported 29.60% of its total production and availed 16.46% of the total export subsidy amounting to Rs.406,534,222.
The companies owned and controlled by Mr. Makhdum Omer Sheryar (relative of Mr. Makhdum Khusro Bakhtiar) RY Group exported 31.17% of its total production and availed 18.31% of the total export subsidy amounting to Rs. 452,343,696.
The Punjab Government’s role also became controversial when ECC allowed export of 0.3 million tons of sugar and refused to grant subsidy. The provincial government of Usman Buzdar came forward to rescue the sugar barons.
Out of 0.762 Million tons of sugar exported, 0.474 Million tons (62%) was exported before the withdrawal of subsidy and the remaining 38% was exported after the withdrawal of subsidy. It is also worth mentioning here that Rs. 3 billion were allocated by the Punjab Government for the subsidy (From January 2019 to onwards) but Rs. 2.47 Billion were utilized from 1st January to 24th May 2019.
It is quite evident that the sugar mill owners who availed maximum subsidy possessed political clout and influence in decision making and they tried to gain maximum benefit out of it in a very limited time. A deeper assessment of the reasons for award of subsidy after associating the Government and the mill owners/beneficiaries is required which would be done by the Commission.
Was the export of sugar justified? The Inquiry Report stated that the export of 1.00 Million tons of sugar was recommended during the Sugar Advisory Board (SAB) meeting held on 11th September 2018 as excess sugar was available. The ECC approved the export of 1.00 and 0.10 Million tons of sugar on 2nd October and 4th December 2019 respectively.
It is relevant to mention here that the then secretary commerce Younas Dagha had opposed subsidy for export of sugar and argued before the policy makers that after devaluation and reduction in sugar price in international market there was no justification to dole out any subsidy.
However, during the same meeting Secretary Ministry of National Food Security raised the issue that low production of sugarcane was expected in the upcoming season due to water shortage. Despite that the export was recommended, that too without making it time-bound. In the meeting of SAB held on 15th April 2019 and 6th May 2019, Punjab raised concern over the rising prices of sugar in the local market. The issue of increasing price of sugar was discussed in the subsequent meetings in June 2019 as well but no decision was taken about recommending a ban on export despite the fact that estimated stocks calculation presented during the meeting showed net stocks as negative 0.191 Million Tons (excluding the stocks of 7 sugar mills of Sindh).
The analysis done by Inquiry Committee shows that prior to permission of sugar export, the retail price of sugar was around Rs. 55 per kg. But as the export of sugar started, the price of sugar started to increase and kept on increasing with the increase in the export quantity.
The market players knew that the sugar stocks are running low in the country, hence with increasing exports the price kept on increasing consistently every month. In April and May 2019, maximum quantities were exported and price jumped accordingly and touched Rs 78 per kg.
The Sugar Inquiry Report also warned that “Satta” might play major role as sugar players have indicated that the prices might cross Rs 100 per kg in the domestic market for Ramadan that year.
Now the economists and researchers suggest that the sugar industry was largely owned by political elites irrespective of any divide as they belonged to both treasury and opposition benches so the government should come out from any involvement in this whole business chain.
All decisions regarding sugar industry are highly political and the government finds it hard to manage its affairs properly because if sugar remains surplus it’s problematic and if there were shortages then the problems multiplied. It’s basically an issue of management that requires solution on governance front.
Without placing compete de-regulation the problem of sugar cannot be solved. Staying out and no intervention will be better option for the government and it should restrict itself to maintain strategic reserves through purchasing of sugar from the cheapest avenues from local sources or through imports in order to save consumers from exploiters in presence of free market economy.
The writer is a staff member
