Home Latest News Interim Punjab Government Blames LHC Stay Orders for Sugar Price Hike

Interim Punjab Government Blames LHC Stay Orders for Sugar Price Hike

Two separate stay orders have prevented authorities from monitoring supply chain and curbing smuggling, claims report

by Staff Report

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The interim Punjab government on Tuesday blamed stay orders issued by the Lahore High Court (LHC) for worsening a crisis that has seen prices of sugar nearly double over the past month, claiming it had prevented authorities from effectively monitoring the supply chain.

A report submitted before the provincial cabinet by the Punjab food secretary alleged that two stay orders issued by the LHC—on May 4 and Aug. 15—had facilitated a hike in sugar prices. It said the Aug. 15 order had barred the government from monitoring the supply chain, facilitating the commodity’s smuggling to Afghanistan and reducing available stocks ahead of the crushing season.

According to the report, sugar mills and speculators are currently charging Rs. 180/kg for sugar against a notified retail price of Rs. 100/kg. It alleged that from May 4 till now, around 1.4 million metric tons of sugar had been sold by sugar mills with an average profit of Rs. 40/kg over the notified price. The report stressed this “extortion” of Rs. 55-56 billion was solely due to the stay orders, as they had barred the monitoring of the supply chain, denying authorities the ability to check the movement of sugar and its smuggling to Afghanistan.

The Punjab government report states that 7.73 million metric tons of sugar were produced this year, including carry-over stocks, of which 5.32 million metric tons were from Punjab, which was sufficient to meet the needs of the province, Islamabad, parts of Khyber-Pakhtunkhwa, Azad Jammu and Kashmir and Gilgit-Baltistan. It said that on April 10, the Federal Ministry of National Food Security and Research had notified an ex-mill price of Rs. 96.08/kg and a retail price of Rs. 99.33/kg for Punjab, but this had been suspended by the LHC on May 4, 2023. The case’s next hearing, it said, was Sept. 20, 2023.

In light of the stay order, which had maintained price fixation was a provincial and not federal issue, the report said powers of price fixation were delegated to the Cane Commissioner Punjab by the provincial cabinet through the Punjab Foodstuffs (Sugar) Order, 2023. This attempt at price fixation had also been halted by the LHC< which had issued a stay order against it on Aug. 1—with the next hearing due for Sept. 5. During the hearing, the stay order had been maintained and the case referred to a division bench.

Due to this, alleged the report, around 0.7 million tons of sugar had been smuggled through the western borders, depleting the country’s strategic reserves. This would have an impact on prices in the coming year, warned the report, as there was a 17% decrease in the cultivation of standing sugarcane crop. Millers and brokers smuggling sugar to Afghanistan had further facilitated the price hike, per the report. It claimed brokers set prices through WhatsApp groups, with mills supporting this as their profit increased.

The report has warned that sugar stocks are declining and prices are expected to further increase in the coming weeks if urgent steps are not taken to address the issue. It recommended expediting the vacation of the stay orders and detaining speculators under the Maintenance of Public Order to protect remaining stocks of the commodity.

Taking note of the report’s findings, the interim Punjab government has decided to file appeals against the stay orders.

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