LAHORE - The Trading Corporation of Pakistan (TCP) has been delaying payment of around Rs5 billion to sugar mills for around one month for 100,000 million tons of sweetener procured from the industry, causing cash flow problems for most of the factories, industry sources told The Nation on Sunday.
“The industry is facing a deep financial crunch because of TCP’s failure to make timely payments against its purchases, they said and maintained that the mills have to pay millions of rupees to banks and in case of non-payment to banks, mills will be declared defaulters.
Furious on TCP chairman Rizwan Ahmed, the millers claimed that he is using delaying tactics in the way of payments, as he is trying to transfer Punjab based-officials, working in the head office of the corporation. “The chairman is trying to transfer Director Logistic Mubarak Ahmed and Director Finance Maqsood Jahangir, who are in favour of timely payment to sugar mills, mostly situated in Punjab.” They are of the view that the chairman is constantly making transfers of Punjab-domiciled staff and replacing them with Sindh-based officials to take the control of the Corporation.
Sugar mills argued that sugar is in surplus in the country and the industry is constrained to sell below cost, which may result in default to banks. They said that TCP had procured 0.16 million tons of sugar from sugar mills in the light of the ECC decision.
It is to be noted that the Sugar Advisory Board has deferred the export of sweetener by at least 45 days. Millers flayed that the decision of SAB, however farmers consider this move appropriate.
According to sugar mills representatives, the mills in the country have around 2.1 million ton of sugar while according to Trading Corporation of Pakistan the national entity has around 106,000 ton of sugar stocks.
The government was intending to allow around 500,000 tonnes of sugar in view of better stocks but after the damage to sugarcane crop it was not feasible to allow export. Now the SAB would seek complete information from the provincial governments and stakeholders besides growers to ascertain the actual damage to sugarcane crop besides stocks position in the government warehouses.
The relief has been provided to the sugar mills for supplying the commodity to the domestic market. However, a condition had been applied to avail the benefit of 0.5 percent FED, the quantity on which the facility was being provided should be equal to the quantity exported otherwise the rate of FED would remain the same at 8 percent.
Sources said that sugar mills have warned the federal government that mills will be unable to commence crushing season on time, in case government does not allow further export of 0.5 millions tons of sugar and procure 0.2 million tons through Trading Corporation of Pakistan.
Normally, sugar crushing season starts from November 1 every year but for the last two years crushing has not commenced on time with the mill owners citing different reasons for the delay.
They have already requested ministry to allow export of 0.5 million tons of sugar immediately and make arrangements to procure 0.2 million tons through TCP to resolve the current crisis of the sugar industry.
Moreover, they said that the TCP was delaying payments against its earlier purchases of 0.1 million tons sugar in spite of the fact that the millers had completed all the required and formalities.