Sugar mills tricked me into restricting imports: PM

Published On: April 9, 2019 05:00 AM NPT By: Sagar Ghimire  | @sagarghi

KATHMANDU, April 9: Prime Minister KP Sharma Oli has vented ire against sugar mill owners for 'tricking' him into imposing quantity restrictions on the import of sugar last year.

Addressing the inaugural function of the 16th annual general meeting of the Confederation of Nepalese Industries (CNI), he said domestic sugar mill owners betrayed him by raising the sugar price exorbitantly and creating a shortage of the item in the market after the government restricted imports in line with their request.

“They [sugar mill owners] came to tell me that their stocks of sugar were so high they would not be able to clear them even in the next year. They told me that high imports including from Pakistan had created a problem as they were not able to sell at Rs 53 or Rs 54 per kilo, and they requested me to impose the import restriction,” explained Prime Minister Oli.

“I agreed to the request. But a sugar shortage hit the market from the next day. It was sold at Rs 85 per kilo and even at up to Rs 105 . This is not business, this is not fair,” he added.

He came down heavily on the sugar mills for creating a distortion in the market, misusing the government's relief measure aimed at promoting domestic industries.

“I want to tell you all---stop this type of cheating,” he told the meeting of the umbrella organization of industrialists , while reiterating that he was ready to help investors overcome all hurdles and problems they have been facing.

“The public pays value added tax and using fake bills to cheat the government of the tax is not acceptable. That way, neither will your business thrive nor will the economy grow,” he added.

Prime Minister Oli's accusation comes nearly seven months after the decision to import restrictions taken at the behest of sugar mill owners.

Bowing to the sugar mill lobby, the government in September last year decided to restrict sugar imports to 100,000 tons for the fiscal year. Imports came to a halt, leaving the market to rely on supplies from domestic sugar mills.

Though the sugar mills reportedly made a commitment not to raise the price as a condition for the import restriction, the price went through the roof soon after.

Public outrage over the shortage and the artificial price hike on the eve of the festive season led a parliamentary committee to repeatedly instruct the government to intervene in the market and take action against those involved in the artificial hike.

Concluding that there was 'collusion' between government officials and the sugar mills to artificially drive up prices, the Public Accounts Committee (PAC), upon the recommendation of its sub-committee, instructed the Commission for Investigation of Abuse of Authority (CIAA) to investigate .

However, the price started to take a correction on the back of normalization of supply only after the festival season. Sugar is currently trading at Rs 75 per kilo in the retail market, down from as high as Rs 105 during the shortage last year.

Many criticize the government for imposing import restrictions to protect domestic sugar mills at the expense of consumers.

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