Pakistan Refuses Subsidies for Sugar Exports to Tajikistand
Pakistan has declined Tajikistan’s request for subsidies on the export of sugar. The government has permitted the export of 40,000 metric tonnes (MT) of sugar to Tajikistan, but the latter was anticipating financial assistance. This decision was made during a recent meeting of the Economic Coordination Committee (ECC).
Export Approval and Warning to Sugar Millers
In addition to the 40,000 MT destined for Tajikistan, the government has allowed the export of 0.1 million tonnes of sugar. However, authorities have warned sugar millers that the export permission would be revoked if they fail to settle dues owed to sugarcane growers. Previously, the government had relaxed conditions for millers despite their failure to adhere to retail sugar price benchmarks and delayed payments to growers.
B2G Negotiations and Roles Defined
In the recent ECC meeting, the Commerce Division clarified that the arrangement with Tajikistan was a business-to-government (B2G) agreement. The Trading Corporation of Pakistan (TCP) would assist the Industries and Production Division in negotiations with Tajikistan. However, the lead role in these discussions would be taken by the Industries and Production Division, working through the Pakistan Sugar Mills Association (PSMA).
No Subsidy for Tajikistan
The ECC instructed the Ministry of Industries and Production to negotiate with Tajikistan’s government through the PSMA, aiming to offer preferential prices without any subsidies from the Pakistani government. The TCP chairman noted that the proposed export would occur via land routes, eliminating any port handling charges.
Previous Discussions and Requests
The Industries and Production Division reported that during the Prime Minister of Pakistan’s recent visit to Tajikistan, discussions took place regarding Tajikistan’s interest in purchasing sugar at discounted transportation rates. Following this visit, a formal request was made by Tajikistan’s Prime Minister for 40,000 MT of sugar at preferential prices.
Additionally, Tajikistan sought financial assistance regarding port usage fees for importing goods through the State Material Resources agency.
Assessment of Sugar Availability
To evaluate the availability of surplus sugar for export, the Sugar Advisory Board (SAB) convened on August 13, 2024. It assessed stock positions provided by various governmental bodies and confirmed that after retaining 810,000 MT for the upcoming crushing season, sufficient stocks would be available for exporting 40,000 MT to Tajikistan. It was agreed that the TCP would hold bilateral negotiations with Tajikistan regarding pricing and other export formalities, with the ministry providing support throughout the process.
Proposal for Business-to-Government Export
The Industries and Production Division proposed that the 40,000 MT of sugar be exported to Tajikistan under a business (PSMA) to government (Tajikistan’s designated agency) arrangement. Furthermore, the TCP would coordinate negotiations between the PSMA and the Tajik agency while facilitating any necessary arrangements related to port usage fees.
ECC Approval and Directives
The ECC reviewed and approved the summary submitted by the Industries and Production Division regarding the export of 40,000 MT of sugar to Tajikistan. It modified the proposal to ensure that the Ministry of Industries and Production would lead negotiations through the PSMA. The TCP would support the ministry, and if necessary, any further matters would be presented to the ECC after negotiations.
The ECC also reiterated that no subsidies would be granted for this deal and confirmed that, given the land route for export, no port charges would apply.
Sufficient Sugar Stocks for Export
During discussions on the 0.1 million tonnes of sugar export, the Ministry of Industries and Production assured the ECC that adequate sugar stocks were available until the new crushing season began. Thus, the proposal to export this amount was deemed secure and feasible.
