Gwadar: Govt may allow private sector to set up sugar refinery

[Naveed Yaseen]

By Aftab Maken
ISLAMABAD: The government is all set to give a go-ahead to the private sector to set up a sugar refinery at the Gwadar port to meet local demand in the wake of high prices of the sweetener in the international market, official and industry sources confided to The News on Tuesday.

“Yes, the Ministry of Industries is considering allowing the private sector to set up a sugar refinery at the Gwadar Port to deal with sugar crisis in the long run,” an official of the Ministry of Industries and Production told The News but requested not to be named.

“It is not the business of the government to set up an industry or run an industrial unit but we will facilitate and encourage the private sector to do business by setting up industrial units,” the official said.

The federal cabinet has allowed private sugar millers the import of 0.35 million tons of raw sugar before the start of crushing season in October or November as the food and agriculture ministry anticipates a sugar shortfall of 1.5 million tons in 2009-10.

There are 82 sugar mills for crushing cane in the country but no sugar refinery for processing imported raw sugar for public consumption. Imported raw sugar is only processed by mixing it with cane juice during the crushing season.

Besides import of 350,000 tons of raw sugar by the Pakistan Sugar Mills Association (PSMA), the government would import 70,000 to 100,000 tons through the Trading Corporation of Pakistan (TCP) which would be processed either by local mills or a refinery in Dubai, said a well-informed official of the food ministry. “It is right time that the government gets rid of the shackles of PSMA by allowing the setting up of a sugar refinery for processing raw sugar,” the official said.

“We are studying the government’s plan for a sugar refinery in the country and have submitted proposals in this regard,” a leading commodity importer said from Karachi by telephone.

Since last year, India, who used to export raw sugar, “has become a net importer and has set up 10 to 15 refineries on fast track as it sees a shortfall of five million tons in sugarcane production,” he added.

During the season in India, the cost of refining raw sugar came to $60 per ton at the most, allowing the refineries to make reasonable margins, said the importer.

A proposal for setting up a sugar refinery reveals the project requires an investment of $30 million, which could be higher if the refinery wants to export electricity, generated through high steam pressure system. It will reduce the cost of production with revenues from power export.

It estimates the project capacity at 750 to 1,000 tons per day of refined sugar based on Phospho-flotation and Ion Exchange technology and annual production at 0.25-0.30 million tons.

The proposal says electricity will cost nothing due to cogeneration of steam and power (as steam will be generated at higher pressure and passed through a turbine). Power requirement is 60 kilowatt hour (kwh) per ton of refined sugar and the refinery can run 330 days in a year, taking 30 days for maintenance.

The interested party also says they have commissioned a refinery for a sugar mill and can build a refinery at a much lower cost and will commission it with their own manpower and hand over the same to the client.

The cost of refining will depend to an extent on fuel cost, but taking coal as a fuel available at $100 per ton the cost will be less than $60 per ton of refined sugar including both fixed and variable cost, the proposal concludes.

http://www.thenews.com.pk/daily_detail.asp?id=198643