The Financial Express

BSFIC sends SOS for Tk 12.70b fund

| Updated: November 17, 2019 12:49:21

Evaly and Fianancial Express Evaly and Fianancial Express
BSFIC sends SOS for Tk 12.70b fund

The Bangladesh Sugar and Food Industries Corporation (BSFIC) has sent a distress signal to the government, seeking immediate sanction of Tk 12.70 billion to save the state-owned sugar mills.

The corporation sought the fund as subsidy to cover for losses incurred due to mills selling sugar at the government-fixed rate, which is lower than the market price, officials said.

Supporting the BSFIC's plea, Industries Secretary Abdul Halim recently wrote a letter to Finance Secretary Abdur Rouf Talukder, urging the latter to extend cooperation by providing the fund.

In his letter, Mr Halim wrote that there are 15 sugar mills and one engineering factory under the management of BSFIC.

Since independence, the corporation has been selling sugar being produced from sugarcanes at the mills and also importing raw sugar from abroad. In 2002, the government allowed the private sector to import raw sugar and sell in the local market, resulting in a decline in price of the item.

As the BSFIC sells sugar at a price fixed by the government, which is lower than its production/buying cost, the corporation is incurring a significant loss, reads the letter.

During 2010-12 period, the corporation posted a loss of Tk 4.89 billion due to the difference between the buying and selling prices of imported sugar while the 15 mills witnessed a loss of Tk 14.18 billion between fiscal year (FY) 2006-07 and FY 2012-13.

The cumulative loss stood at Tk 19.08 billion as of FY 2012-13.

However, a commercial audit found that until FY 2012-13, the government owed Tk 17 billion to the corporation. Later, the government paid off Tk 4.30 billion to the corporation.

In the meantime, the corporation incurred a loss of Tk 34.82 billion between FY 2013-14 and FY 2017-18.

According to the letter, the Prime Minister sanctioned Tk 5.0 billion late last year to clear due bills to sugarcane suppliers, due wages to employees, retirement benefit and bank loans.

The finance ministry, however, did not release the fund despite repeated requests from the industries ministry.

As a result, Mr Halim wrote, farmers could not be given due bills against sugarcane supply, and they could not be supplied with fertiliser and pesticides. Therefore, farmers are losing interest in sugarcane production.

Failing to receive due bills, farmers now supply sugarcane for jaggery production and thus mills are not getting required sugarcane for sugar production.

Due to the financial crisis, the corporation is failing to pay wages regularly, retirement benefit to employees, due bills to suppliers as well as loan installments, reads the letter.

"It has become difficult to save the sugar industry without cooperation of the finance division," Mr Halim wrote.

Contacted, a senior finance division official told the FE that the division is now looking into the BSFIC's plea and a decision in this regard will be taken considering the immediacy of the financial crisis.

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