India has been providing sugar to Nepal at a discount (levy) for years. The discount provided a kind of relief as the price of sugar in Nepal was cheaper. When the government decided to give a trading company the discount to import sugar, there were suspicions of irregularities.

The UML government led by Manmohan Adhikari had written to the Indian Embassy on 10 February 2012 to allow a private company named Pearl Trading of Kedia to import sugar. After the Cabinet decided to import 20,000 metric tons of sugar for the fiscal year 2012/13, irregularities were suspected. The Accounts Committee had started an investigation into the decision to allow a trading company to import sugar at a profit of about Rs 4.75 per kg. The Accounts Committee had started questioning the concerned administrator to find out the reason why the government had allowed the import of sugar in a way that benefited the private company. The administrators had informed the Accounts Committee that the Cabinet had decided to allow the import of sugar by appointing a private company and that they had written to the Embassy accordingly. The Nepali sugar was being provided to Nepal at Rs 13 per kg. When it arrived in Nepal, including customs duty and transportation charges, it cost a maximum of Rs 17.

The sugar was not sold by Salt Trading itself and was given to Salt Trading. Salt Trading kept a profit of 25 paisa per kg for itself. But the sugar worth Rs 17 was sold for Rs 22. Based on the selling price, there was a profit of Rs 5 per kg of sugar. Therefore, a profit of Rs 4.75 paisa per kg was paid to Pearl. Since the profit percentage was high, the Accounts Committee suspected that the government had committed irregularities by giving the responsibility of importing sugar to a private company in collusion.

According to the source, before 2048/049, Neslon Trading and Salt Trading had a tradition of importing sugar, and then the process of providing unfair facilities to Pearl Trading of Kedia was started. Committee member Birodh Khatiwada informed that the investigation was started based on the same suspicion. A three-member subcommittee was formed to investigate under the chairmanship of Deep Kumar Upadhyay, who represents the Congress in the Accounts Committee. The members of the subcommittee included Khatiwada of UML and Balaram Gharti Magar of the Rastriya Prajatantra Party (RPP).

While the Accounts Committee was investigating, India had issued a circular stating that it would not be able to provide sugar under the quota system it has been providing every year in the fiscal year 2051/052. According to the information provided by the Ministry of Supplies, after receiving the information that sugar would not be provided, ruling UML MP Rajendra Shrestha had gone to India to discuss the same issue. Similarly, Arun Dhandhaniya, a businessman from Calcutta related to Nepal, had also reached Delhi to discuss the sugar supply. Dhandhaniya was Pearl's Indian agent. If the sugar provided by India at a discounted price was not available, the price would definitely increase in Nepal.

The news prepared by Kantipur Daily was published on Chaitra 23, 2051 under the title ‘Investigation into sugar import by the Accounts Committee on sugar by the Public Accounts Committee’ focusing on possible irregularities in the import of quota sugar provided by India to Nepal, permission given to a single private company for import, and India’s announcement that it would not provide quota sugar, among other issues.