Trade
3 months ago

Sugar sales at subsidy

BSFIC trade gap jumps to Tk 80b

Published :

Updated :

Trade deficit of the Bangladesh Sugar and Food Industries Corporation (BSFIC) has stood at more than Tk 80 billion for various reasons, including the sale of the sweetener at a subsidised rate.

Other reasons, according to sources, are insufficient basic raw materials, higher operating expenses and payments against bank loans.

The deposed Hasina government suspended the operation of six state-run sugar mills in 2020 to reduce costs.

Losses are piling up as the mills are not adjusting production costs with accumulated losses, hitting a new high of more than Tk 91.75 billion since fiscal year (FY) 2005-06, according to the Bangladesh Economic Review.

"Cash-strapped sugar mills are still struggling to meet regular expenses. The BSFIC finds it difficult to service its bank debts and make payments due to lack of required funds," a BSFIC official told the FE.

According to sources, the outstanding dues, including interest, owed by the mills to five state-owned banks (Sonali, Janata, Agrani and Rupali) amount to an estimated Tk 92.91 billion.

The BSFIC cannot make profits due to huge loans and interest. The government even subsidised Tk 2.80 billion in FY24.

The mills cannot produce sugar at an expected level despite having the capacity due to lack of necessary raw materials, according to a high official.

"Besides, production cost of sugar by the state-owned sugar mills is higher than its selling prices. As a result, the mills are incurring heavy losses," he said.

Currently, there are 15 mills under the Sugar and Food Industries Corporation, with an annual production capacity of 0.21-million tonnes.

This volume is way too less than the country's annual demand for more than 2.2-million tonnes of sugar. To meet this demand, 2.2-2.4 million tonnes of raw sugar are imported annually.

Industries ministry has undertaken multiple projects to diversify sugar products by tapping the existing potential to make the mills profitable. Some projects are currently being implemented, the official said.

The BSFIC prepared a five-year roadmap for 2022-23 and 2026-27 fiscals with an eye to making the sugar industry profitable.

A source said the loans taken by the sugar mills were intended to support sugarcane farmers. While farmers repaid their debts by supplying sugarcane, the mills failed to do so.

In FY23, the corporation generated Tk 8.19 billion from all its mills and factories.

However, management costs exceeded Tk 15.34 billion. For years, these state-owned mills have consistently incurred average annual losses of Tk 10 billion.

rezamumu@gmail.com


Share this news