Federal Investigative Agency (FIA) has made its much-awaited report on the sugar crisis public. The report has revealed the names of major beneficiaries, including politicians, who availed subsidies of millions of rupees from the provincial government to export white sweetener to various countries.
These groups and politicians profited from export income and caused a local shortage, increasing prices for sugar for local consumers.
Major Beneficiaries of Govt Subsidies in 2018-19
Jahangir Tareen’s JDW Group
According to report findings, the maximum benefit of export was drawn by the companies owned and controlled by Jahangir Khan Tareen (JDW Group) which exported 17% of its total production and availed 22.71% of the total export subsidy amounting to Rs. 561.03 million.
The second highest beneficiary was the R.Y.K. Group, owned and controlled by Makhdoom Omer Shehryar Khan (relative of Mr. Makhdoom Khusro Bakhtiar), which exported 31.17% of its total production and availed itself 18.31% of subsidy amounting to Rs. 452.34 million. It may be noted that the Group owners also include Chaudhry Munir and Moonis Elahi.
Al Moiz Group
The third highest beneficiary was Shamim Ahmed Khan (Al Moiz Group), which exported 29.60% of its total production and availed 16.46% subsidy amounting to Rs. 406.53 million.
The above mentioned three groups of companies availed a total subsidy of 57.50% that amounts to Rs. 1.419 billion out of the total subsidy of Rs. 2.470 billion
The company owned and controlled by Ghulam Dastaghir Lak (Ex-MPA of PML-N 2013-2018), exported 52.50% of its total production and availed 6% of the total export subsidy amounting to Rs. 148.31 million.
The reports of the inquiry committees tasked to probe sugar and wheat crises in the country have been made public while the prime minister has directed forensic analysis to further expand findings.
The prime minister had constituted two high-powered committees under Director General Federal Investigation Agency, which also involved a senior officer of the Intelligence Bureau and DG Anti Corruption Establishment Punjab, to investigate the causes behind the crises and price hike of the said commodities.
After the formation of the committees, the prime minister had repeatedly resolved to expose and penalize those found responsible for the sugar and wheat crises to avoid the recurrence of such acts.
The prime minister has directed forensic analysis of 10 sugar mills to further expand the findings.
It is worth mentioning that the information collected so far says that the whole information system used for decision making by the government is dependent on the information provided by the sugar mills themselves.
The committee’s considered opinion based on documentary evidence was that the export of sugar was not justified as the sugarcane production was expected to be low in the harvesting season of 2018-19.
With the export of sugar in January 2019, the prices of sugar started increasing immediately in the local market and the exporters gained benefits in two ways: they were able to gain subsidy and they made profit from the increasing sugar prices in the local market.
The price was increased from Rs. 55 per kg in December 2018 to Rs. 71.44 per kg in June 2019 although GST increase was also implemented from 1st July 2019.
The Punjab Government was providing the subsidy at a time when the price of sugar was increasing in the domestic market, noted the report. Out of 0.762 million tons of sugar exported, 0.474 million tons (62%) were exported before the withdrawal of subsidy and the remaining 38% were exported after the withdrawal of the subsidy.
It is also worth mentioning here that Rs. 3 billion were allocated by the Government of Punjab for subsidy (from January 2019 and onwards) but Rs. 2.47 billion were utilized from 1st January to 24th May 2019. Sugar mill owners who availed maximum subsidy had political clout and influence in decision making and they tried to gain maximum benefit in a very limited time, noted the report.
A deeper assessment of the reasons for awarding of subsidy after associating the Government and the mill owners/beneficiaries is required, which will be done by the commission.
It also noted that the Sugar Advisory Board failed to take a timely decision on banning the export of sugar.
Subsidies Availed by Beneficiaries in 2015-18
During the subsidy scheme period from 2015-2018, following were the major beneficiaries of a total subsidy of Rs. 24.91 billion
- RYK Group, owned and controlled by Makhdoom Omer Shehryar Khan (relative of Mr. Makhdoom Khusro Bakhtiar), was the largest beneficiary with a total subsidy of Rs. 3.94 billion. Group owners also include Chaudhry Munir and Moonis Elahi.
- JDW owned by Jahangir Tareen availed over Rs. 3.05 billion.
- Hunza Group, owned by M Waheed Ch, Idrees Ch and Saeed Ch availed Rs. 2.8 billion.
- Fatima Group, owned by Faisal Ahmad Mukhtar and family availed Rs. 2.3 billion
- Sharif Group, owned by Sharif Family availed Rs. 1.4 billion
- Al-Moiz Group, owned by Shamim Ahmad and Nouman Ahmad Khan availed Rs 1.45 billion of the total export subsidy.
- Omni group, owned by Anwar Majeed availed Rs. 901 million of the total export subsidy.