Import restriction on sugar hurting consumers

Smoke bellowing from Shreepur-based Reliance Sugar and Chemical Private Limited in Bara, on Sunday, December 31, 2017. Photo: THT

Kathmandu, October 9 A sub-committee under Public Accounts Committee (PAC) has concluded that the immature decision of the government regarding quantitative restriction on import of sugar has been adversely affecting consumers and sugarcane farmers, as consumers are compelled to pay high prices and cane growers have not been paid their dues.

The sub-committee is preparing a report on pricing of sugar, demand and quality supply by holding discussions with a wide range of stakeholders, including ministers, government officials, sugar mill owners, importers, consumer rights activists and retailers, among others, and based on market inspection.

The report will be submitted to the chair of the PAC on Thursday, according to lawmakers of the sub-committee. The preliminary finding is that the government has taken an immature decision without proper consultations, commitment from sugar mill owners regarding retail price and cross-verification of stocks with the sugar mills. The sub-committee today held talks with sugar mill owners and put forth queries on the rampant price hike of sugar and artificial shortage.

The PAC had formed the sub-committee to study the pricing and demand-supply situation of sugar, as the government is reluctant to implement the price of sugar fixed by PAC at Rs 63 per kg. Lawmakers of the PAC claim that sugar mill owners had made a commitment to fix the retail price of sugar at Rs 63 a kg during a meeting at the prime minister’s residence before the government slapped the quantitative restriction on sugar import.

Based on that reference, the PAC had instructed the government to maintain price of sugar at Rs 63 per kg. However, price of the essential commodity has skyrocketed due to collusion between importers and domestic sugar producers following the restriction on import, according to PAC.

During the meeting with sugar mill operators today, the lawmakers said that sugar mills have breached the moral ground of their commitment to keep the price level at Rs 63 per kg before the quantitative restriction on imports was implemented. However, sugar mill operators said that they had not made any commitment to maintain retail price at Rs 63 per kg.

“Just to produce one kg of the commodity, sugarcane worth Rs 57 is required and we had proposed a factory gate price of Rs 62 per kg, excluding value added tax,” said Shashikant Agrawal, owner of Everest Sugar and Chemical Industries. The government has fixed the price of per quintal of sugar at Rs 536.56 – Rs 471.28 from sugar mills and Rs 65.28 as grant from the government for farmers, which earlier used to given through sugar mills as VAT refund.

Likewise, Rajesh Kedia, general secretary of the Sugar Mills Association Nepal and owner of Indushanker Sugar Mills, presented a request letter written to the prime minister, in which they have quoted a price of Rs 62 per kg, excluding VAT, and requested the quantitative restriction on import for the protection of domestic industries.

Sugar mills have been unable to clear outstanding dues to sugarcane farmers till date as their stocks have not been cleared, according to sugar mill owners. They added that in recent days retailers have been scared of purchasing sugar due to apprehensions that the price might come down and stocks of the sugar mills have been lying idle.

During the meeting, Agrawal urged government-owned Salt Trading Corporation and National Trading Ltd to purchase stocks of around Rs 1.5 billion from the sugar mills so they can clear the outstanding dues to the sugarcane growers. The government has instructed the sugar mills to clear the outstanding dues worth Rs 1.5 billion to farmers within five days. However, the mill owners said today that they will not be able to clear dues before Chhath festival.