Islamabad, November 21, 2023 – The government, led by Dr. Gohar Ejaz, Minister of Industries and Production, dismissed the request from the Pakistan Sugar Mills Association (PSMA) to export sugar.
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PSMA, 84 sugar mills served show cause notices for cartelization
ISLAMABAD: The Competition Commission of Pakistan (CCP) on Tuesday said it issued show cause notices to 84 sugar mills and their association for cartelization.
The CCP said that it had issued show cause notices to Pakistan Sugar Mills Association (PSMA) and its 84 member mills on multiple instances of prima facie cartelization in violation of Section 4 of the Competition Act, 2010.
The show cause notices have been issued after the CCP decided to initiate proceedings under Section 30 of the Act on the recommendations of an enquiry into the anti-competitive activities in the sugar sector.
The CCP’s enquiry has found multiple instances where the Pakistan Sugar Mills Association (PSMA) is acting as a front-runner for cartelization in the sugar industry.
“Evidence gathered during search and inspections conducted on the premises of PSMA and JDW Sugar Mills seems to suggest these anti-competitive activities have continued since 2010.”
The impounded data included exchange of emails between a senior official of one of the Sugar Mill (Member of PSMA) and PSMA Punjab zone office bearers regarding sensitive commercial information such as mill-wise, district-wise sugar stock position, and even the quantity of cane crushed, sugar produced, recovery percentage, carry forward old/raw sugar, total sugar, quantity sold, balance and sold percentage.
“Moreover, an analysis of the WhatsApp messages exchanged in a group of PSMA officials, the same senior official of that Sugar Mill was found to be in constant communication with regard to price and stock related data of sugar mills.
“The impounded data indicated the senior official’s continued involvement in sharing/receiving sensitive information regarding sugar industry since 2012 when he was nominated as the focal person for coordinating the sugar stock position by PSMA,” the CCP said.
Furthermore, the PSMA’s platform was also being used by member sugar mills to collectively make commercially sensitive decisions such as reduction in domestic stocks/supplies of sugar, which led to an increase in or maintenance of desired price levels in the relevant market.
PSMA and its members have been provided an opportunity of hearing to plead their case with reference to the prima facie specific violations indicated therein.
PSMA and all 84 sugar mills prima facie violated the Act by collectively deciding to export sugar and thereby fixing the quantities of sugar to be supplied in Pakistan.
Similarly, they also violated the Act by reducing stocks of sugar through exports; hence collectively raised and maintained prices of sugar in Pakistan.
Moreover, in the crushing season 2019-20, 15 sugar mills in Punjab under the auspices of PSMA, collectively decided to delay crushing of sugarcane leading to reduction in quantity supplied in the market.
In Punjab, 45 sugar mills used PSMA’s platform to share business sensitive information with each other.
Lastly, PSMA and sugar mills divided quantities of sugar in tenders issued by USC on various occasions.
“The CCP found 19 mills in Punjab to have violated the Act with reference to a tender dated 2019 whereas, 30 mills from all over Pakistan have been issued show cause for an earlier tender.”
The findings of CCP’s previous sugar enquiry report in 2009 had found that PSMA and its members had engaged in fixing of prices and collusion in the purchase of sugarcane, production of sugar, and sale or trade of sugar.
In the instant matter it appears that PSMA and its member mills sought to keep prices stable, inter alia, by controlling supply of sugar available in the domestic market.
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FBR to monitor sugar production through surveillance cameras
ISLAMABAD: Federal Board of Revenue (FBR) will monitor production of sugar through surveillance cameras that will be installed at sugar mills.
In this regard a Memorandum of Understanding (MoU) was signed between FBR and Pakistan Sugar Mills Association (PSMA).
The signing ceremony was held at FBR headquarter. Member IR Operations Dr. Muhammad Ashfaq Ahmed signed the agreement on behalf of the FBR and PSMA President Sikandar Khan signed on behalf of the association.
The FBR on September 21, 2020 issued rules regarding monitoring of production through video links.
On the occasion, Dr. Muhammad Ashfaq, Member IR-Operations said that the FBR was taking all measures to reduce interaction between tax officials and taxpayers and trying to facilitate taxpayers for ease of doing business.
In this regard vide analytics has been introduced, he said, adding that through this technology the monitoring of production would be done through advanced cameras.
He said that FBR would take help of this technology to monitor sugar production for accurate estimates and tax collection.
PSMA President Sikandar Khan praised the FBR initiatives and said that the sugar mills had voluntarily agreed on electronic monitoring of sugar production.
He hoped that the efforts of FBR to use technology and it would improve image of the tax organization.
Tariq Shaikh, Project Director briefed the participants on video analytics and said that recognized vendors would provide technological support to sugar mills and through this the production sites would be directly connected to FBR’s control room.