Monday, October 8, 2018

Remove import restriction on sugar, if price cannot be controlled: PAC

Quantitative restriction on sugar imports has been hurting both the consumers and sugarcane farmers. Thus, the lawmakers asked the government to either remove import restriction on sugar or control the price. They also concluded that the strong nexus between importers and sugar mills but weak government monitoring is the key reason for the rampant price hike of sugar.
Speaking at a sub-committee under the Public Accounts Committee (PAC) of the Federal Parliament today, Lawmaker Lekh Raj Bhatta said that they have found that the sister concerns of the sugar mills have been importing sugar and are now raising the price of sugar rampantly to take benefit of the restriction on sugar import. The government had imposed quantitative restriction on sugar import after the repeated request of the sugar mills.
The PAC has formed a sub-committee to study pricing, market situation and smooth and quality supply of sugar.
The government has fixed an import quota of 100,000 metric tonnes of sugar for this fiscal year on the request of sugar mill owners, as they had been complaining that the stock of sugar produced by local sugar manufacturers was not finding a market due to cheaper imports. The government currently imposes 30 per cent customs duty and 13 per cent value added tax (VAT) on sugar import. Despite higher taxes the government was finally compelled to impose quantitative restriction on sugar import citing that the sugar manufactured by Nepali sugar mills could not compete with imported sugar.
However, the lawmakers also blamed the government that it has imposed import restriction without enough groundwork like sugar in stock, quantity imported and pricing.
The immature decision of the government 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.
Though, lawmaker Prem Aale – taking part in the discussion – claimed that sugar mill owners had raised the price of sugar against their commitment to keep the retail price of sugar at Rs 63 per kg, some other lawmakers asked whether there was any agreement on maximum price of sugar with sugar mills before introducing the quantitative restriction.
"The government authorities are also keeping silent," he said, asking the commerce secretary Chandra Kumar Ghimire and industry secretary Yam Kumari Khatiwada to stop the rampant price hike. "If the government cannot control price," he said, asking the secretaries to withdraw import restriction on sugar.
According to Ghimire, the ministry had recommended for quantitative restriction based on the assumption that there is sufficient stock of sugar as the country has stock of 461,000 tonnes of sugar but the monthly demand is around 18,000 to 20,000 tonnes only. "Sugar mills in the country produce 175,000 tonnes in a year and 286,000 tonnes have been imported, so there will be a stock of around 51,600 tonnes of sugar by the end of the fiscal year," he replied.
Likewise, lawmakers at the PAC also suspected the 'financial nexus' between traders, mill owners and government officials. "While fulfilling the demands of sugar mill owners, why did the government not ask them to make a strictly maintain the retail price at a certain level," lawmaker Chanda Choudhary asked.
Following the pressure from the consumers and lawmakers, a cabinet meeting yesterday also formed a committee at the government level, whereas the PAC has already formed a sub-committee that 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.
Earlier on Thursday, the PAC meeting had also directed the government to cap the price of sugar at Rs 63 per kg. However, industry minister Matrika Yadav has expressed reservation over the decision of the committee, terming the parliamentary panel’s act of fixing price as ‘impractical’.
The report will be submitted to the chair of the PAC on Thursday, according to lawmakers of the sub-committee. 

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