Few months before, NTL and STC had agreed to sell sugar to retailers at Rs 51.75 per kg, setting condition that the latter have to sell sugar to consumers for Rs 53 per kg. However, NTL and STC later raised the selling price to Rs 52 per kg which further dampened retailers´ interest.
STC and NTL have been selling sugar for the last few months to intervene the market by importing sugar at reduced customs rate of 10 percent, down from 25 percent. Retailers, however, maintain that they are getting high profit margin by selling sugar purchased from open market.
"Private sugar producers have been providing sugar at Rs 54 per kg and retailers are selling for Rs 56-60 per kg, depending upon transportation cost,” said Pabitra Bajracharya, president of Nepal Retailers Association. “But retailers get profit margin of only a rupee per kg, excluding transpiration and other cost, by selling sugar distributed by the state-owned entities.” He also said there was a possibility of big dealers hoarding sugar bought from state-owned entities.
Urmila Shrestha, general manager of STC, said the STC had increased commission to Re 1 per kg from 25 paisa per kg last year, in a bid to attract more retailers. Shrestha also ruled out the possibility of hoarding, saying that sugar is being distributed by studying the past sales records of concerned dealers. SCT is providing 3 to 10 tons of sugar per month to retailers and dealers, depending on their selling capacity.
STC and NTL had imported 30,000 tons and 10,000 tons of sugar respectively as per the government plan to tame the skyrocketing price of sugar in the market. To shore up the supply during Dashain and Tihar, the Ministry of Commerce and Supplies (MoCS) has instructed the STC and NTL to import 30,000 tons and 20,000 tons of sugar respectively.
Shrestha said the STC would import the required quantity of sugar by October.
Local traders said price of sugar increased in the market because of declining supplies due to fall in sugar production. Though Indian sugar barely enters Nepali market, impact of sugar prices in Indian market has also been felt here. Price of sugar in India has shot up to INRs 32-34 per kg as compared to INRs 26-28 per kg about a fortnight ago. Sugar prices have also increased from $420 to $560 per quintal in international market.
According to Sugar Mills Association, India, which imports two million tons of sugar annually, saw a decline in sugar production -- down to 25 million tons in 2008/09 fiscal year from 26.5 million tons in the preceding year.
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