Fool proof liquor sticker re-emerges amidst industry protests
View(s):The government will go ahead with the fool proof sticker scheme for all imported and local liquor products from July this year amidst industry protests and mounting allegations against the sticker printing deal.
The affixing of a sticker with barcodes now confined only for imported liquor bottles and cans will be made compulsory for all local liquor products with effect from July 1, a senior official of the Excise Department said.
The process of developing mobile app and QR code for the fool proof sticker is now underway and the department has brought down 30 special machines to this code, he said.
The department will take action to cancel the licenses of liquor traders who fail to comply with the relevant regulations of fool proof sticker scheme under the Excise Notification No. 01/2021, he added.
The present government will continue the contract given to Indian company Madras Security Printers Pvt Ltd by a tender initially called in 2016 and recalled in 2017 due to technical issues. According to the 5-year contract, the Indian company has to supply 384 million stickers per year and 32 million per month, but its supply has been irregular and their printing paper quality was low and it could easily be duplicated by anyone, a senior Treasury official said.
Several local liquor manufacturers noted that that the quality of the samples of fool proof liquor stickers was not suitable for use in their high-speed machines.
However the Government is not in a position to suspend the tender as it has been four years since the tender was awarded and it has to pay a penalty in case of cancellation, he added.
The Excise Department has already banned the sale of all brands of imported liquor without the new foolproof sticker introduced by the Department.
The Excise Notice No: 4/2019 which was published under Gazette Extraordinary No: 2128/30 issued by former Finance Minister Mangala Samaraweera in this regard under the Excise Ordinance on June 20, 2019 is now in force. Awarding of this tender to the Madras company, rejecting several other bidders who have quoted lesser prices, came under severe criticism at that time from industry stakeholders.
They have protested over the selection of this printer with allegations of its involvement in two scandals in India and Kenya in 2017 and 2018 and the impracticality of the fool proof liquor scheme.
The Indian company’s bid for the deal was US$5.99 to print 1000 stickers during the second tender although its initial bid was $3.19; other bidders claimed adding that one of them has placed a bid of $4.57 per 1000 stickers and the lowest bid was $2.8 per 1000.
Therefore the then government has been compelled to pay an additional amount of $1075200 (or slightly over $1 million) for 384 million stickers obtained in the first year, the Auditor General’s relevant report revealed.
Meanwhile local manufacturers are vehemently opposing the government’s decision to introduce fool proof liquor with QR code for all liquor products without addressing practical issues in the implementation of this scheme.
Several leading liquor manufacturers told the Business Times the department’s scheme of manual pasting of stickers is not practical for their speedy production process and they have suggested a digital coding system sometimes back with the consent of the former Finance Minister in 2019.
They noted that the per-hour production capacity at its manufacturing plants are much higher than the manual pasting capacity of stickers per hour and a suggestion was made to then authorities to go for a digital system.
On the other hand these companies will have to import newly designed machines at a very high cost and the installing of such machine after the removal of existing labeling machinery will take more than one year incurring a heavy loss due to stoppage of production, CEO of a leading liquor production company said.
The quality of the samples was not suitable and compatible for use in high-speed machines, he pointed out adding that the industry has proposed the faster and cost effective digital coding system instead of the outdated manual sticker pasting method.
The manufacturers have called upon the government to absorb the cost of stickers as the move will bring in revenue of around Rs. 20 billion by way of a tax hike per annum to the treasury. Madras Security Printers Company of India will collect Rs 2 the cost of the sticker from every liquor bottle or a can of beer from Sri Lankan consumers as the government will have to increase taxes resulting in a price hike, MP Buddhika Pathirana told a media conference in Colombo recently. He has also filed a complaint in this regard with the Bribery Commission’s office. (BS)