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Rising prices push govt into sugar import

Star Report
The government has at last resorted to its own market instruments to control price spiral of essentials, allowing Bangladesh Sugar and Food industries Corporation (BSF1Q to import sugar, the price of which was forecast to rise byTk 10 a kg from next month.
After a hiatus of two years, the government has asked the BSFIG the lone sugar producer in die country. to import 1 lakh metric ton (MT) of sugar tobridlcpricchike.
But corporation sources feared that the decision to import sugar through the public sector is unlikely to succeed in keeping prices under control due to strict clauses In the Bangladesh Public Procurement Regulations, 2003, prescribed by the World Bank and International Monetary Fund.
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The new public procurement regulations stipulate keeping international tender open for 42 days as against the previous 14 days. As such, the first consignment of sugar is unlikely to land at Chittagong port before August due to the long tender process.
The total duty of 103.35 percent is also likely to affect price, said the sources.
In this backdrop, the corporation wrote to the Ministry of Industries to make state to state arrangement for import of sugar to shorten the delivery time to only two weeks.
"As in the case of oil import from Kuwait, if the prime minister offers the state to state deal to Prime Minister Thaksin Shinawatra of Thailand, the prime import source of Bangladesh, we will get the sugar by as early as May. This will allow us to inject sugar in the market to control the price," a high official of the BSFIC told The Daily Star yesterday on condition of anonymity.
The production under the corporation's 15 mills has fallen short of target this year. The government set a production target of 1.8 lakh MT for the 2003-2004 crushing season but ended up with only 1.18 lakh MT.
The corporation sells sugar to wholesalers at Tk 26.5 a kg, the rate fixed by the government to check prices in the retail market where sugar sells at Tk 31-32. Every month, the corporation injects 28,000-30,000 MT of sugar in the market through its dealers under
district quota to keep the price stable.
BSFIC's stock of sugar will be exhausted at the end of this month, the official said, adding some 75,000 MT of sugar is now in the private sector, which is not enough to meet market demand.
He said private sector importers are trying to manipulate the market after sensing the looming shortage of government stock. The per kg retail price shot up by Tk 4 yesterday.
The price of sugar in the international market shot up to $275-280 per MT this year from $220-230 per MT a year ago. The fact that sea freight charges also rose may have upped the import price, the official said.
He said Bangladesh usually imports sugar from India, Brazil, Thailand, but India recently stopped exporting due to rising domestic consumption. So, Thailand is the viable country to import from.
According to an unofficial estimate, the country now needs 10 lakh MT of sugar every year for domestic consumption. Last time the government imported sugar through the BSFIC and the Trading Corporation of Bangladesh was in 2002.
The government withdrew the restriction on sugar import by the private sector on June 8, 2002. The embargo was put back on March 17, 2003, and again withdrawn on October 11, 2003.