Inquiry Committee points fingers at six influential groups

Aftab Ahmed

Islamabad: The Inquiry Committee on Sugar has pointed fingers at the six political and influential groups which include the Jahangir Tareen and the Sharif family involving in cartelization to manipulate prices of sugar in the market.

Following the findings of the FIA Inquiry Committee, the government has formed an Inquiry Commission to probe the issue further.

Inquiry Committee in its report said that the major Increase in ex-mill price of sugar occurred between December 2018 to June 2019 when it increased by almost Rs 12 per kg which is from Rs. 51.64 to Rs. 63 59 per kg. This period saw no increase in sales or other taxes and the price of sugarcane, the major input, was also stable. The only factor that stands out was the export of sugar which coincides with this period.

To establish the manipulation and cartelization of sugar mills concrete evidence is required which can be possible through a proper forensic audit of the sugar mills. However, as per the data provided by the SECP and PSMA, some facts stand out showing the control of very few in the industry.

Six groups control about 51% of the production. These groups of sugar in Pakistan include JDW Group, RYK Group, Al-Moiz Group, Tandilanwala Group, Omni Group, and Sharif Family Mills.

These groups have the capacity to manipulate the market by joining hands for cartelization and subsequent manipulation. The control of so few, mostly with a political background, of the sugar industry, shows the Wong influence they can exercise on Policy and administration.

The sugar mills have their own association called Pakistan Sugar Mills Association (PSMA). Many policies are conveyed to the sugar mills from the platform of PSMA. The call for the closure of the sugar mills In Punjab, for instance, from 30.12.2019 to 1C1.01-2020 was also given from the platform Of PSMA. Later on, PSMA held a meeting with the Punjab government, and then the strike was called off.

All the mills did not participate in the strike but this platform can be used in acting in the union in order to obtain objective by using pressure tactics.

In the strike call, four sugar mills of sharif group, four of Al-Moiz Group, two of Tandianwala Group, two of RYK Group and one of JDW Group, and many other mills participated.

The maximum number of mills that participated in the strike was 25 on one particular day. Since the strike was called off on the call of PSMA, it can be safely assumed that PSMA initiated the strike as well. This is a sign of cartelization, not all sugar mills are part of it but there are groups of sugar mills with common interests.

Utility Stores Corporation had floated tenders on different dates for procurement of sugar with different quantities. But sugar mills had offered the same price except one.

This kind of offer indicates that there are some collusive practices. The cost of production of each and every sugar mill is different and it is impossible to offer the same price with varying cost of production. Though there are signs of cartelization the concrete evidence can be established by conducting a forensic audit.