TCP saves Rs 7.8 billion in commodity financing

The state-run grain trader has saved an amount of Rs 7.8 billion in the commodity financing operation by creating competition among the financial institutions. Sources told Business Recorder Wednesday that the Trading Corporation of Pakistan (TCP) successfully saved a record amount of Rs 7.79 billion during last three and half years by widening its commodity financing operation from large banks to mid-size and Islamic banks.
A significant cut down in the premium rates was made possible by the TCP''s top management and the finance department by introducing an element of competition between the consortium and non-consortium banks. Previously, TCP was borrowing from a consortium of banks, however it is also obtaining commodity financing from several other banks, including Islamic banks to get a reasonable rate for commodity financing.
As TCP is the federal government''s entity and needs billions of rupees financing for commodity operations, now the banks other than consortium agree to lend the entity at lower rates. In 2013, TCP was obtaining financing for commodity operation at three-month KIBOR plus 2.70 percent, while presently it is borrowing at three-month KIBOR minus 0.06 percent, they maintained.
TCP mainly carries out its business activities under the directives of the Economic Co-ordination Committee (ECC) of the Cabinet and its commodity-related activities are funded through the financing from commercial banks. Sources said that the efforts of the TCP management to reduce financial burden on the exchequer were led by TCP Chairman Rizwan Ahmed, appointed by Prime Minister Nawaz Sharif in July 2013.
These joint efforts led to gradual reduction of financing cost on TCP on quarterly basis and the cost of financing was cut down significantly, resulting in saving of over Rs 7.8 billion in July 2013 to January 2017. With corrective measures and improved management, TCP has also been able to reduce the burden on the exchequer on other heads. A competitive bidding process was initiated by the chairman TCP in September 2013 for the clearing and forwarding charges in urea import and it was expected to alone save considerable amount of money.
Sources said the federal government has also appreciated the efforts of TCP for saving billions of rupees by holding negotiations with financial institutions. "Federal Secretary Commerce Azmat Ranjha has also written a letter to the chairman TCP on TCP''s efforts to reduce the burden on the exchequer by cutting its commodity operation financing. He praised Rizwan Ahmed''s leadership and the TCP finance department on the significant reduction in financing costs of the corporation through successful negotiations with banks.