Amidst negotiations over the high price quoted by the Indian government for sugar imports, Nepal is exploring alternative sources, with top officials indicating a potential approach to Pakistan if India's terms do not prove favorable.

Issues ranging from the quality of small crystal sugar to pricing have led to a deferment in the government-to-government import process to meet the demand for the Tihar festival, as revealed by sources familiar with the matter.

Nepal faces an annual sugar requirement of approximately 270,000 tonnes, with a deficit of around 100,000 tonnes. Private sector imports and government companies occasionally contribute to fulfilling this shortfall, amounting to nearly Rs3 billion annually, according to the Department of Customs.

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Despite New Delhi's allowance of 25,000 tonnes of sugar exports to Nepal on a quota basis until September 30 next year, the country grapples with meeting the demand. The price of sugar has surged from Rs75 to Rs160 per kg in the retail market due to India's export restrictions, creating scarcity during key festive seasons like Dashain and Tihar.

Gajendra Kumar Thakur, Joint Secretary at the Ministry of Industry, Commerce, and Supplies, expressed concerns over the quality of the offered S30 sugar from Gujarat, describing it as inferior with very small crystal size. The delay in importing sugar from Gujarat, coupled with disagreements over price, has resulted in a shortage during the Tihar festival.

Negotiations with the Indian government are ongoing, with officials citing a 25 percent higher price compared to the existing rate. In light of this, Nepal is considering importing medium crystal sugar from Pakistan, where prices are deemed more competitive.

Under the government-to-government arrangement, India designated the National Cooperative Exports Limited to export sugar. Thakur anticipates an improvement in supply as the sugarcane harvest commences, ensuring domestic production sustains the market for six months.

Despite efforts by the Salt Trading Corporation to increase sugar availability, long queues persist, prompting the corporation to raise prices to Rs115.50 per kg. As the Tihar festival unfolds, the sugar shortage remains a challenge, exacerbated by delays in import approval and bidding processes caused by the finance ministry's tardy permission issuance.

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