0.2mn tons of sugar tender: TCP to ask 32 mills for extension in bids’ validity

RIZWAN BHATTI

KARACHI: Following the decision of the Economic Coordination Committee (ECC) of the Cabinet, Trading Corporation of Pakistan (TCP) has decided to approach 32 mills for extension of bids’ validity for sugar buying. The bids’ period expires today (Wednesday).

The ECC on Monday decided to renegotiate price formula with sugar mills for purchase of about 200,000 tons commodity and a committee has also been constituted to solve the sales tax and price fixation issue.

Sources told Business Recorder since bids’ validity expires today (Wednesday), therefore it will be necessary to approach all participants of sugar purchase tender to enhance the validity. This will be third time, when TCP will ask mills to extend the bids’ validity as earlier on the request of the corporation, bidders had already extended the validity twice.

On the directives of federal government, the TCP had floated a gallop tender on November 3, 2011, for purchase of sugar from the local unmills up to 200,000 MT. As per the tender’s terms & conditions, the bidders were required to quote bids for a minimum quantity of 5,000 MT and maximum of 20,000 MT in each case, to ensure widest participation.

The tender was opened on November 12, 2011 and as many as 32 parties expressed their interest in selling sugar stocks to the TCP. The bids received in the tender are valid up to November 22, 2011, however nothing could be finalised regarding purchase of sugar, with the result the TCP asked mills to extend bids’ validity for 10 days, sources said.

Later, on December 1, 2011, again on the request of the TCP sugar mills extended the bids’ validity till December 14, 2011 in the absence of any decision on sugar purchase due to price issue.

Initially, in the sugar purchase tender, all 32 mills offered bids for varying quantities at rates ranging from Rs 65,000 to Rs 66,000 PMT, however quoted prices were much higher than prevailing market prices. Therefore, sugar purchase is being delayed.

Recently, representatives of Pakistan Sugar Mills Association shown there willingness to reduce bid price from Rs 66 per kilogram to Rs 58.9 per kilogram to offload previous year’s stock. However, the ECC is still reluctant to purchase sugar on this price, as it believed that current offered price is still higher than market rates.

Source said, today TCP will approach all 32 bidders for extension of bids’ validity and it is likely that all bidders will extend validity for another 7 to 10 days to continue the current process of sugar purchase. If bidders didn’t do this, the TCP will have to issue a new tender for purchase of 200,000 tons of sugar from local mills.

So far not a single bid has been accepted as the pricing formula is still under process, after which, the ECC will take a final decision on the sugar purchase.