Salt Trading Corporation (STC) is mulling to purchase sugar from domestic manufacturers in a bid to take excess stock off their hands.

The state-owned company currently imports sugar to maintain a buffer stock in order to keep supply and demand in balance and prevent price fluctuations. It has started talks with the Ministry of Industry, Commerce and Supplies for permission to buy sugar from local factories.

There are 13 sugar mills operating across the country. According to the Sugar Producers Association, they have a combined stock of 108,000 tonnes of sugar valued at Rs8.7 billion in their warehouses.

STC Chief Executive Officer Urmila Shrestha said the corporation had considered purchasing sugar from domestic producers. “We are negotiating prices with the private sector and holding talks with the government to obtain its permission,” Shrestha said.

Nepal’s sugar requirement amounts to 250,000 tonnes annually. STC used to import 25,000-30,000 tonnes of sugar annually until last year. According to Shrestha, this time STC is importing only 5,000 tonnes with the view of procuring the rest of the requirement domestically.

“We have received half the order, and we expect the rest to arrive in the next two weeks,” said Shrestha, adding that STC had purchased sugar from Renuka Sugar Mills, India through a global tender process.

In view of the approaching festival season, the government company plans to intervene in the market with the new shipment to keep prices stable. “In addition to the new stock, we will be selling 15,000 tonnes of sugar stored in our warehouses during the festivals,” Shrestha said.

STC’s plan to buy sugar domestically follows demands by local factories to check sugar imports to protect domestic industry. Bowing to pressure from private sugar mills, the government raised the import duty on sugar to 30 percent from 15 percent in the last fiscal year.

Local sugar producers complained the import duty was still too low and urged the government to hike it to at least 50 percent. Last November, the Agriculture Ministry too had recommended to the Finance Ministry to raise the duty to 50 percent.

Sugar mills have been delaying payment to sugarcane farmers for their crops pointing to unsold stocks in their warehouses. They said they could not compete with cheaper imports and lacked cash to pay the farmers. As per the association, sugar mills owe Rs4 billion to sugarcane growers.

The government has planned to open fair price shops for the benefit of customers during the festival shopping rush. Two state-owned enterprises—STC and Nepal Food Corporation—will be providing essential goods

at subsidised rates from these fair price shops from September-end.

According to Shrestha, salt will be sold at a discount of Rs2 per kg. “We are currently assessing the cost of sugar so that we can sell it at the best possible price from these shops,” she added.