“We have no option but to procure sugar from local producers and sell through state-run entities to tame rising prices due to paucity of sugar in the country. We have asked sugar producers to sell us at least half of their total production,” Ganesh Dhakal, spokesperson at the Ministry of Commerce and Supplies (MoCS), told myrepublica.com, after the meeting with sugar producers on Wednesday.
However, Shashikanta Agrawal, president of Sugar Mills Association, said he would respond to the government proposal after consulting with the sugar producers.
Production of sugar is expected to fall to 70,000 tons this year, down from average annual production of 110,000 tons in the past years. The government estimates the annual demand of sugar between 150,000 to 170,000 tons.
The government will purchase sugar in coordination with Inland Revenue Department (IRD) to discourage evasion of VAT by manipulating the sales bills. The MoCS officials have also asked the sugar mills to disclose their existing stock.
Dhakal said the government can sell sugar for a maximum price of Rs 70 per kg if the private sector sells the sugar to the government. The government has been procuring and selling sugar through National Trading Ltd (NTL) and Salt Trading Corporation Ltd (STCL).
In a bid to intervene the market, the government had, a few months back, permitted the two entities to import 50,000 tons of sugar from Brazil and Thailand at one percent customs duty.
Traders recently raised the price of sugar alarmingly, taking advantage of slow procurement process. Though the government has set the price of sugar at Rs 61 per kg, traders are selling sugar at as much as Rs 90 per kg.
Dhakal also informed that 25,000 tons of sugar is arriving from Brazil soon. However, the arrival of another 25,000 tons from Thailand is still uncertain.
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