ISLAMABAD: Pakistan is likely to start importing 500,000 tons of white crystal sugar by December to meet domestic needs and maintain strategic reserves, a top government official said on Thursday.
The government has already announced plans to import 500,000 tons of raw sugar through private mills, after an expected shortfall in the 2009/10 crop, but millers are refusing to import the sugar for reasons of cost.
Pakistan expects to produce about 3 million tons of refined sugar from the 2009/10 crop against the annual domestic demand of 4.2 million tons.
State-run Trading Corporation of Pakistan (TCP) was waiting for formal approval to begin the tendering process, which is expected to start by next month, the TCP chairman, Saeed Ahmed Khan, told Reuters.
“We will do the tendering process in a way so that the consignments start coming in January, February, March,” Saeed Ahmed Khan said in an interview in his Islamabad office.
“It will be done in a manner that we have a strategic stock of 500,000 tons by June 2010 and be able to flood the market in case of a crisis,” he said of the tendering.
Pakistan faces a shortfall of more than 1 million tons of sugar and shortages are expected to be acute after June. Output from the new crop has started trickling onto the market.
Khan said some of the 82 mills in Sindh and Punjab provinces, the main sugar areas, had started crushing while the rest would be operating by the end of the month.
Pakistan produced 3.2 million tons of refined sugar last year, according to estimates from millers, and the country imported 225,000 tons of refined sugar this year to meet demand and keep prices in check.
In spite of that, Pakistan has faced shortages since last month when the Supreme Court ordered millers to sell sugar at Rs40 per kg (48 US cents), compared with then-market prices of about Rs46 per kg.
Government efforts to implement the court decision have caused confusion, sparking even higher free-market prices for the sweetener.
To control prices, the cabinet on Wednesday decided to sell sugar at Rs38 a kg through state-run discount shops for the next 30 days.
Khan said that, including extra supplies for the Muslim festival of Eid ul-Adha, due next week, the TCP would be providing 50,000 tons of sugar to discount shops from its imported stocks over the next two to three weeks.
After supplying the discount shops, the TCP would have a total imported stock of 150,000 tons sugar by December.
Last season’s domestic output had been completely exhausted, he said.The government has also said it would import 500,000 tons of raw sugar through private mills that could be processed alongside the domestic crop, but a top miller said they had already told the government they could not do that.
“We have already refused to import raw sugar as we don’t have the financial resources and also its landed cost would be more than the prevailing market price of refined sugar,” said Iskandar Khan, chairman of the Pakistan Sugar Mills Association.
Khan said if the mills refused to import raw sugar, the government would have the option of importing more refined sugar.
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