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Forget about probe into sugar hoarding, Tarin told

31 August, 2009

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KARACHI: While the nation is mired in an unending debate over events that occurred some 20 years ago, several decisions taken in the last several days will have strong repercussions on Pakistans economic health and reinforce a widespread belief that corrupt Pakistani politicians and bureaucrats would always remain immune to accountability or prosecution.

An investigation by this correspondent showed that key economic decision-making is gradually moving from the Cabinet Committee on Economic Affairs (ECC) to a powerful political lobby, which has conveniently subverted and overruled the bodys decisions in the past few months.

In one of several most controversial decisions taken over the past few days, the federal government has decided not to launch any judicial or criminal probe against the strong sugar lobby in the country that worked through a well-hatched plan to raise sugar prices to record levels (the current average price of sugar for common Pakistanis is Rs 52 per kg).

Under an unannounced decision taken at the highest level, the government has decided not to identify high-placed politically connected individuals, who engineered the criminal non-compliance of the ECC decision of February this year to import 200,000 tons and release another 100,000 kgs of sugar from the TCP stocks to utility stores.

Talking to this correspondent, Finance Minister Shaukat Tarin had said last month that non-compliance of the ECC decision by the ECC was a very serious matter and a thorough probe was being launched.

An impeccable source revealed that Tarin was told to take it easy and forget about the probe. The outcome of this probe would open a Pandoras box, said a highly-placed government source. Its an open-and-shut case and this inquiry will only take 24 hours to expose the culprits.

The federal cabinet had announced last week a national price of Rs 45 per kg for sugar, allowing the sugar millers and dealers to make a profit of at least Rs 17 per kg against the production cost of about Rs 28 per kg.

It is now more than a month that sugar prices have crossed a record level of Rs 55 per kg and even after the cabinet decision sugar is not found for Rs 45 per kg anywhere in large cities like Karachi, Lahore, Islamabad, Peshawar and Quetta.

Several credible accounts are available to suggest that a several-hours-long meeting between the sugar millers and Minister for Production and Industries Manzoor Wattoo was interrupted by telephone calls from other important high-placed government officials.

Surprisingly, this intriguing meeting ended without any concession for the poor. Instead, the minister for production allowed a price of Rs 49 per kg for sugar. He also ordered the withdrawal of his strong letter to the provincial governments to search warehouses attached with sugar mills and other punitive action against the sugar hoarders.

Reliable official sources said that the lobby of sugar mill owners from Sindh played a decisive role in subverting any government inclination to probe the root cause of this years record hike in sugar prices.

These sources mentioned that while government inspectors aggressively checked sugar stocks with mill owners in the Punjab, no such official inspection took place in Sindh, where most mills are controlled by the ruling elite.

It has also emerged that the federal government has decided not to question the State Bank of Pakistan for its controversial decision to restrict offloading of sugar stocks kept against loans by providing unexplained extensions that resulted in further hoarding and increase in sugar prices. In its circulars, the State Bank has cited discussions with stakeholders.

In another astounding decision that will impact the future economic health of Pakistan, the federal cabinet overruled an Economic Coordination Committee (ECC) decision taken just four days ago to restrict power purchases from controversial rental power projects to 1,500 MW by ordering an upper limit of 2,250 MW from rental power projects.

The federal cabinet did not provide answers as to why and how a four-day-old ECC decision was reversed and that too for a project that had drawn criticism from the entire spectrum of energy issue specialists in Pakistan.

Even the ECC decision allowing 1,500 MW in the rental power sector had surprised observers when put against the statement of Shaukat Tarin on the Geo TV programme Aaj Kamran Khan Key Saath in which he had expressed concern over the economic feasibility of the rental power projects.

There should be minimum use of rental power in meeting the countrys power shortage. Its an expensive option, conceded Tarin.

While a maddening official rush to secure rental power continues, the government has yet to furnish full details of the expected power shortfall in summer next year and why that projected shortfall cannot be met through 4,500 MW of power that Pepco had promised to provide through IPPs by the middle of next year.

Also the government has not explained measures, if any, taken to fully utilise the idle capacity from existing private and official power projects. The finance minister, like most prominent economists, is concerned over pressure on foreign exchange reserves and Pakistans trade balance that will come once independent power plants and rental power plants swing into action.

The day when the federal cabinet gave a go-ahead for 2,250 MW through rental power the oil prices in the international market had crossed a 10-month high of $75 per barrel, which meant an additional requirement of $3 billion for Pakistan to meet next years requirement for oil imports alone.


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