Treasury officials and monopoly flour distributor Prima were in talks to obtain a promised government subsidy while regulatory pressure was put on the company to keep flour prices down.
The flour subsidy is one among the many subsidies the government is keen to maintain to shield consumers from rising international market prices.
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rnBut critics say the government attitude of trashing an existing agreement and moving for price control is a strategy that could erode investor confidence.rn
rnWheat flour was put on a list of essential items brining prices under the control of the Consumer Affairs Authority (CAA).rn
rnThe friction between the government and Singapore based Prima, the only big distributor of whet flour arose after, that company asked the government to reimburse over a billion rupees owed as a subsidy from January to May this year and said they will be raising prices to match prices in the international market.rn
rnBut the government in public says they are not ready to pay the money