Govt may hike sugar prices amid pressure from refiners

The government is likely to increase the prices of sugar in a week in the face of pressure from refiners amid a shortage of the essential commodity in the market.

"In response to requests from refiners, the government is reviewing what prices of sugar could be set," said AHM Safiquzzaman, director general of the Directorate of National Consumer Rights Protection, on Monday.

"There will be a meeting at the commerce ministry next week. At the end of the meeting, it will be known whether the prices will go up or remain the same," he said at a meeting organised by the directorate with all traders, from sugar refiners to retailers.

There has been a supply shortage of sugar in the market for the last few days which has driven up its prices. Sugar price has increased by Tk20 to Tk110 from the government-fixed rate of Tk90 per kg, amid claims of reduced production due to gas crisis.

Meanwhile, the Bangladesh Sugar Refiners Association has written to the Bangladesh Trade and Tariff Commission for a review of the price of sugar amid its shortage in the market.

Golam Rahman, secretary general of the sugar refiners' association and managing director of Deshbandhu Group, told The Business Standard, "We have requested a re-fixation of sugar price due to various reasons, such as LC (letter of credit) complications, strong dollar and a production crisis caused by the gas shortage."

At the meeting, retailers and wholesalers complained about low supply and higher prices of sugar. At the time, refiners cited reduced production caused by the gas crisis as the reason for the supply shortage.

"Everyone is to blame for the crisis in the market. But we want to keep the supply normal. For this, the gas crisis has to be solved. And wherever anyone gives us a requisition, we will deliver it directly," said the secretary general of the sugar refiners association.

He said from today sugar will be supplied as per demand from traders without any delay.

The country's five top sugar refiners include City Group, Meghna Group, TK Group, Abdul Monem Limited and Deshbandhu Group. Among them, the factories of City, Meghna and Abdul Monem face an acute gas crisis, resulting in a production drop by half.

"We are getting just 4 PSI (pounds per square inch) of gas against the requirement of 15 PSI," said Shafiur Rahman, deputy manager of Meghna Group.

Amitava Chakraborty, an adviser at City Group, said, "Due to the gas crisis, now we can produce only 1,400-1,500 tonnes against our daily capacity of 5,000 tonnes. Now consumers have to pay an additional tax of Tk30 per kg of sugar. Even if the tax is reduced, it is possible to bring down the price."

Following the volatility in the sugar market, the consumer rights directorate has held several meetings at the market monitoring, factory inspection and trader levels. In view of this, the problems identified have been reported in writing to the commerce ministry.

At the meeting, AHM Safiquzzaman said, "There is a problem with LC. There is a problem with trucks, having to sit in front of factories. Some refiners are not writing unit prices in supply orders. Additionally, due to the low supply of gas, production has decreased. Initiatives are being taken to resolve these issues quickly."

"If a unit price is not mentioned in the voucher, there remains room for manipulation. Companies have promised to normalise supplies from today, but it will take a few days. The cost of dealers and traders is high also due to the problem of transportation," he added.

The directorate's recommendations to the commerce ministry include directing the mills to continue maximum production and supply, monitoring whether sugar is stored outside the mills and arranging regular meetings of the price-fixing committee, ensuring adequate pressure of gas.

The other recommendations are ensuring buying and selling through vouchers, appointing area-wise dealers and arranging direct supply to traders at large wholesale markets according to their demand.  

At the same time, it has been recommended that strict instructions be issued to factories to maintain a normal supply of sugar in the market. ***