TCP sugar purchase tender scrapped: no bid received from PSMA members

Trading Corporation of Pakistan (TCP) has scrapped its first sugar procurement tender as none of Pakistan Sugar Mills Association (PSMA) members participated in the process. Sources told Business Recorder on Wednesday that not a single bid has been received in response to TCP's first tender for the procurement of 50,000 tons of sugar from members of PSMA.
Initially, several parties had shown interest in sugar tender and had got tender documents from TCP offices. However, till the last date no bid was submitted by any PSMA member, they added. Following the directive of federal government, TCP on June 24, 2011 issued a tender for procurement of sugar form mills with the bidding date of July 9, 2011. TCP had invited sealed bids from sugar mills in Pakistan which are the member of the PSMA for the purchase of a quantity of 50,000 tons of white sugar in poly propylene sacks as per Pakistan Standard Quality Control Authority (PSQCA) approved standards ie PS 1822-1997, PD 1822-2007 (3rd review) and PS 3128-1992, respectively.
Interested parties were asked to submit their bids in sealed envelopes for a quantity of minimum 2,500 metric tons to be opened on July 9, 2011 at 12 noon in the presence of bidders. Although some 20 parties purchased tender documents from TCP, but on tender day, when tender box was opened, surprisingly not a single bid was received, reportedly, due to price issue and strict tender modalities.
Sources said that following the recommendations of Inter-Ministerial Committee (IMC), the Economic Co-ordination Committee (ECC) of the Cabinet had fixed the price of Rs 60 per kilogram (excluding taxes) for procurement of 50,000 tons of sugar from mills. In addition, in the wake of previous experience of sugar procurement, strict modalities were designed by the IMC to avoid any default and ensure payment to the sugarcane growers.
Previously, in 2008-09, TCP faced a default of 86,000 tons of sugar by some seven mills who failed to supply the commodity as per agreement. These defaulter mills were barred from participating in the current procurement programme. According to tender documents, 80 percent payment to mills was to be made just after the delivery of procured sugar, and remaining 20 percent payment was to be made after assurance of growers that dues had been cleared by the mills.
However, PSMA did not accept procurement price fixed by IMC and claimed that procurement price is much lower than the cost of production estimated by the mills. Sources said that PSMA also approached ministry of industries and production and showed serious concern over the fixation of Rs 60 per kg (excluding tax) price for procurement of sugar from local mills.
Sugar price stood at Rs 68.50 per kg in wholesale market and was expected to increase in the next one month because of high demand ahead of Ramazan. Therefore, the millers decided not to participate in the procurement process, sources said. "As not a single party has participated in the sugar procurement tender, first sugar procurement tender has been scrapped and if the federal government asked then we will issue a fresh tender for sugar purchase", a TCP official said when contacted.
It seems that millers are getting a better price in wholesale market. Therefore, they decided to keep away from the tendering process, he added. However, sources said it was unlikely that another sugar procurement tender would be issued as the government is also realising the situation. It may be mentioned here that the federal government was considering to buy 0.2 million ton of sugar from PSMA enabling the mills to pay the dues of growers and, in the first phase, 50,000 tons of procurement was announced.