FG Introduces New Guidelines for Raw Sugar Allocation

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Senator Iroegbu in Abuja

The federal government has in response to what it views as unsatisfactory general performance of operators in the sugar production sector in recent times, introduced new guidelines as well as putting in place benchmarks for raw sugar allocation.

The government was said to be uncomfortable with the report of the mid- term review meeting of the National Sugar Development Council (NSDC) which indicated that the general performance of operators was below average,

According to a statement by the Executive Secretary of NSDC, Dr. Latif Busari, the government has also realised that past quota allocation to operators has not been strictly based on Backward Integration Programme (BIP) performance and the incentive has not been effectively utilised in getting operators to improve performance in their BIP implementation.

Busari recalled that the federal government had, following the official take-off of the Nigerian Sugar Master Plan (NSMP) in January, 2013, begun the implementation of the Sugar Backward Integration Programme. A total of three refineries were approved as BIP operators and were made to sign formal commitments detailing a number of indicators by which their performance will be measured.

As part of the arrangement, raw sugar quotas at the concessionary tariff of 5per cent duty and 5per cent levy was to be allocated to operators on the basis of performance of their BIP projects and as incentive to encourage operators to plough back profits to their BIP projects.

In addition, the concessionary tariff was to last for three years in the first instance. Operators’ performance was to be assessed by two special committees set up by the NSMP namely; SURMIC (Sugar Roadmap Implementation Committee) and SIMOG (Sugar Industry Monitoring Group).
Busari said it was in line with the agreements and conditions of (BIP) guidelines, that the federal government after a thorough assessment of the individual performances of the operators between 2013-2016 has deemed it necessary to introduce new guidelines and benchmarks for raw sugar allocation to operators of the BIP.

Under the new guideline, he said that, operators would be required to submit their requests for quota sugar allocation for the following year in December of the preceding year and that the year 2017 allocation shall be the last in which sugar allocation shall be based on the old criteria including market/share refinery capacity. As from 2018 and henceforth, allocation shall be strictly based on quantitatively verified improvement in performance.
Regulatory bodies such as SURMIC and SIMOG, he added, are expected to conduct quarterly monitoring of all BIP projects. Outcome of each monitoring exercise will be forwarded to all operators with copies sent to the NSDC and the Ministry of Industry, Trade and Investment.

To ensure compliance, the Executive Secretary stated that government has also put in place sanctions for poor BIP performance.
He said: “Any operator that fails to achieve the performance target for the year, based on its BIP commitments, as released by the Joint Harmonisation meeting, shall be penalised for poor performance with reduction in its quota commensurate with its performance scores. Scores by operators shall be in percentages and an operator shall be allocated the exact percentage of its score in the year’s projected allocation.

“There will also be sanctions for quota infringement by any of the BIP operators. Any operator that abuses the allocated quota through excess importation shall pay for the excess sugar importation calculated on the extant tariff indicated in the NSMP, for that period or year and not at the concessionary tariff.
“Errant operator must pay the duty penalty for excess importation before it can be allowed by the Nigerian Customs Service to discharge its raw sugar cargo.”