Who benefited the most from the Sugar crisis?

Who benefited the most from the Sugar crisis?

Tahir Ali Khan

Jahangir Tareen has said that he has provided 20,000 metric tonnes of sugar to the utility stores at Rs 67 per kg, thus benefiting the people with 25 million.

This means that they has incurred loss and benefitted of the public by selling it at Rs 67 per kg, Rs thirteen rupees less than the market rate (of Rs 80 per kg).

When the PTI government was set up in August 2018, the retail price of sugar was 53 and the wholesale price was Rs 47 per kg.

According to the data given in the link below, in the fourteen months up to December 2019 in the current government, the retail price in the country increased to Rs 80 and wholesale price to Rs68. Thus, the price of sugar in retail increased by Rs 27 and wholesale by Rs 21 per kg.

Total sugar production in Pakistan is about six billion kilograms. In this way, the sugar makers got an additional Rs.162 billion on the basis of additional Rs 27 per kg. If we base our estimate at Rs 21 per kg, they get an additional Rs 126 billion. Even by careful estimates, they will get an extra Rs100.

If Jahangir Tareen had sold these twenty metric thousand tonnes or two crore kilograms of sugar to the utility stores at Rs 53 per kg, it would have been worth one billion and six crore rupees, but, he said, he sold it at Rs 67 per kg. Thus, its total value goes up to Rs.1.34 billion. Thus, he got an additional profit of Rs. 28 crores against the previous year rate.

According to him, he made a profit of Rs 25 crores by selling the utility stores at Rs 67, less than the market rate but he did not say that how many billions were earned by his sugar companies as and when they sold hundreds of millions of kilograms of sugar by selling it at a rate Rs27 higher than the previous year.

Remember that according to the FIA report on the Sugar crisis, the Punjab government had given an export subsidy of Rs. 2.6 billion to the sugar companies, out of which the companies owned by Mr Tareen got Rs 56 crore.

It is reported that Tareen’s companies account for 18-20 percent of the sugar production in Pakistan.

Of the six billion kilograms of sugar sold in the country, the share of his companies is 20 percent (ie 1.08 to 1.2 billion kilograms), so on account of this, his companies may have pocketed an additional Rs 29 to 32 billion more than the previous year.

And even if you reduce his sugar share/sale by half, he is estimated to still have got an extra 15 billion rupees.

This shows why his companies’ profits increased by more than a hundred percent recently as per official figures.

About Tahir Ali Khan (Official)
I am an academic, columnist, and a social worker.

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