Government rushes to import sugar ahead of the festive seasonDespite receiving a proposal for 30,000 tonnes of sugar over a month ago, the Cabinet only approved it on Tuesday.
The last minute rush is due to the delayed Cabinet decision despite the Ministry of Industry, Commerce and Supplies sending a proposal for 30,000 tonnes of sugar over a month ago.
The government has tasked two agencies — Salt Trading Corporation and Food Management and Trade Company — to import 10,000 tonnes each to ensure adequate supply in the market. The demand for the sweetener soars during Dashain and Tihar.
However, government agencies said that it would be nearly impossible to import sugar in time for the festivals.
Kumar Rajbhandari, spokesperson for Salt Trading Corporation, said it would take at least a month to import sugar after completing the process of opening a letter of credit and contracting a supplier via tender call. “This means that the imported sugar will arrive for Tihar at the earliest,” said Rajbhandari.
According to officials of the Ministry of Industry, Commerce and Supplies, the ministry had sent a proposal over a month ago. “Although the ministry had sought to import 30,000 tonnes of sugar through either of the two government entities, it is surprising that the Cabinet has responded this late,” said a ministry official on condition of anonymity.
Almost every year, the Salt Trading Corporation has been maintaining a stock of 25,000-30,000 tonnes of sugar for the festival season to prevent price hikes. However, the corporation only has 1,500 tonnes in stock ahead of the festive season this year. The corporation has been stuck in limbo in terms of ordering sugar as the government has imposed a restriction on sugar imports since last year. Although the restriction was supposed to be in effect until mid-July, the government has still not issued an official statement on whether or not it has lifted up the restriction.
“The shortage is likely to hit the market if the government does not take effective steps to address the problem on time,” he said.
The Cabinet has also waived half of the 40 percent tariff on imports by these two entities, targeting to maintain the market price of sugar. It means that these public enterprises can now import sugar by paying only 20 percent tariff. “The move will be meaningless if the supply does not arrive on time,” said Madhav Timilsina, president of Consumer Rights Investigation Forum.
According to the Sugar Producers Association, private sugar mills have around 60,000 tonnes of sugar in stock. “The amount will be sufficient to meet the demand of the domestic market until the new sugarcane crushing season begins,” said Shashi Kant Agrawal, president of the association.
Sugar mills say that there will be no price hikes this year due to sufficient supply. Despite having ample supply last year, sugar mills still hiked sugar price by Rs 15 - 20 during the festive season.