Trading Corporation of Pakistan (TCP) has served notices on seven sugar mills for payment of Rs 2.2 billion with a deadline of March 31, 2011 as these mills have failed to supply sugar as per agreement. Sources told Business Recorder on Tuesday that over Rs 2 billion have not been paid by seven mills and they were using delaying tactics, therefore to ensure payment and avoid further delay the corporation has issued notices.
In 2007-08, the state run grain trader procured some 641,000 tons of sugar from mills at Rs 20 to Rs 32 per kilogramme to support the local industry and stabilise prices in the domestic market. As per agreement, the procured sugar was stored in the mills.
However, surprisingly, during last three years sugar prices went up in the local market due to massive shortage and selling spree by eight mills, which reportedly sold TCP stocks, lying in the mills, in the open market. In 2009, when commodity prices hit peak and the country was facing massive shortage, TCP asked mills to supply sugar, however, some of them regretted to provide sugar as per agreement and hence were declared defaulter by the corporation.
Sources said that some eight mills had failed to supply 86,000 tons of sugar and TCP claimed Rs 3.2 billion against these mills. Out of total claim, so far Rs 920 million were received while the remaining Rs 2.29 billion was still to be received. Out of eight defaulters only Fatima Sugar Mills paid full amount of Rs 41,060,884 against non-supply of 1,218 tons of sugar.
As per agreement, Tandlianwala had failed to provide 31,007 tons sugar and TCP claim was Rs 1.11 billion including principle amount, bank interest, accidental losses and 25 percent patent, out of which so far Rs 453 million have been paid while the receivables stood at Rs 663 million. TCP has claimed Rs 132 million against Abdullah Sugar Mills Depalpur for non-supply of 3,336 ton of sugar. It paid Rs 68 million and for the remaining Rs 63 million, was served TCP notice.
As per agreement Haseeb Waqas did not supply 5,312 tons sugar and TCP claim was Rs 221 million. Out of total claim, it paid Rs 27 million, while receivable stood at Rs 193 million. M/s Abdullah Sugar Mills Sargodha failed to supply 13,265 tons commodity while the TCP claim was Rs 555 million, out of total claim, it paid Rs 33 million and so far Rs 522 million remain unpaid. TMK Sugar Mills refused to supply 16,838 tons sugar and TCP asked the mill to pay Rs 642 million, out of which the mill paid Rs 5 million and so far Rs 637 million are outstanding.
Seri Sugar Mill had to pay Rs 152 million for non-supply of 4,400 tons sugar. It paid Rs 3 million and Rs 149 million remained unpaid. TCP claim on Kashmir Sugar Mill was Rs 359 million, as it failed to supply 10,595 tons commodity. It paid Rs 292 million and TCP served notice for payment of Rs 66 million. The Economic Co-ordination Committee (ECC) of the Cabinet had directed the Trading Corporation of Pakistan (TCP) to recover Rs 2 billion from sugar mills that they allegedly defaulted in contracted delivery of sugar, sources close to Chairman TCP told Business Recorder. TCP had provided a list of eight sugar mills owned by influential politicians to the federal government which, according to the Corporation, defaulted in delivery and led to countrywide sugar crisis three years ago.
The sources said, when the issue of sugar procurement from mills came under discussion at the ECC meeting on March 16, Chairman TCP pointed out that in a similar situation during 2007-08, TCP had made payment to the mill owners for purchase of sugar, but eight mills defaulted as they neither returned the amount nor supplied the sugar to the TCP.
Chairman TCP further informed that as far as the recovery of the amount (in billions) is concerned according to the law, 25 per cent penalty be imposed on the defaulting mill owners and the recovery be made through the court of law. Moreover defaulters can be punished through black listing and other measures.
He further informed the ECC that they would soon be filing cases against the defaulters in the court of law. The ECC observed since it was a serious matter, a report, in this regard be submitted to the Cabinet Division expeditiously. "TCP shall recover the amount from the defaulting mill owners through appropriate mechanism or court of law. A comprehensive report in this regard shall be submitted to the ECC in its next meeting," the sources quoted Chairman ECC as directing Chairman TCP, Anjum Bashir.
According to the tender terms and conditions, TCP can not force the defaulting parties to deliver sugar except to invoke clause 8(e) of the terms and conditions of the tender/agreement signed with them. The said clause inserted by a former Chairman TCP, provides that in case the sugar mill(s) fail to replace or deliver the purchased sugar, the sugar mill(s) shall immediately refund the entire payment along with the mark-up at the prevailing rate and a penalty of 25 percent of the payment made.
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