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

Kathmandu, October 8

The sub-committee of the Public Accounts Committee (PAC) of the Federal Parliament today said that the collusion between importers and sugar mills and the weak monitoring of the government are the major reasons for the rampant price hike of sugar in the country.

Lekh Raj Bhatta, a lawmaker, said the sub-committee formed to study pricing, market situation and smooth and quality supply of sugar, has 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 quantitative restriction on sugar import imposed by the government.

The government has fixed an import quota of one lakh metric tonnes of sugar for this fiscal 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 on sugar import. Despite the high 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, lawmakers at PAC have said that the government has imposed quantitative restriction without enough groundwork like collecting the data of the sugar in stock, quantity imported and pricing, among others. They said the government had taken a haphazard decision.

Lawmaker Prem Aale claimed that sugar mill owners had made a commitment to keep the retail price of sugar at Rs 63 per kg, however, they have been charging more citing that the hiked price is the factory gate price and the government authorities are keeping silent. He, today, repeatedly asked the secretaries of the Ministry of Industry, Commerce and Supplies, Chandra Kumar Ghimire and Yam Kumari Khatiwada, to stop the rampant price hike or if the government cannot do so then he urged secretaries to withdraw import restriction.

Lawmakers at the PAC said that the situation was such that it would be compelled to suspect that there is collusion between traders, mill owners and government officials and the leadership if the government remains silent on this. “While fulfilling the
demands of sugar mill owners why did the government not ask them to make a commitment to keep the retail price at a certain level?” asked lawmaker Chanda Choudhary.

Following the rift between the House panel and government in the pricing of sugar both sides have formed a committee to conduct a study on sugar pricing and smooth and quality supply. The Cabinet meeting of Sunday formed a committee at the government level and the PAC has formed a sub-committee for the purpose. Meanwhile, Minister for Industry, Commerce and Supplies Matrika Prasad Yadav has publicly spoken about the government being unable to execute the instruction of the PAC regarding the retail price of sugar.

According to Secretary 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 and monthly demand is around 18,000 to 20,000 tonnes. “Sugar mills in the country produce 175,000 tonnes in a year and 286,000 tonnes have been imported so far, so there will be stock of around 51,600 tonnes of sugar by the end of the fiscal.”

The PAC sub-committee had summoned secretaries from the Ministry of Finance, Ministry of Industry, Commerce and Supplies and Ministry of Agriculture and Livestock Development today to query them about the ineffective market monitoring, clearance of dues of sugarcane farmers and smooth and quality supply. In the meeting, Secretary at the Ministry of Agriculture and Livestock Development Yubak Dhwoj GC, opined that the government needs to operate at least two sugar mills to intervene in the market.

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