The Trading Corporation of Pakistan (TCP) has initiated the process to blacklist two prequalified firms for misleading it over sugar import, causing billions of rupees loss to the national exchequer, sources told Business Recorder.
The TCP had awarded two contracts: one to the Chinese firm Yunnan Coal Chemical Industry Group Co Ltd, for 100,000 tons; and another to Sadat Business Group Ltd, Dubai, for 50,000 tons. But both parties failed to supply sugar as per commitment.
After completing legal formalities, the TCP has cancelled the contracts with both parties, besides forfeiting about $1.6 million, deposited by the parties as performance bonds. On July 14, 2010, TCP Chairman Anjum Bashir in a letter to the federal government had indicated that in case of default, TCP would re-tender for these quantities.
On July 29, 2010, Minister for Commerce Amin Fahim informed the ECC that the "TCP has a competent team", which had processed the import of sugar efficiently and honestly. He especially praised the TCP Chairman for his hard work and honesty. The ECC noted the remarks of the Minister.
Official documents show that the ministerial committee on sugar, constituted in its meeting on July 20, 2010, met on July 26, and took the following decisions: (i) TCP will complete the ongoing sugar import process of 575,000 tons, including the already arrived quantity of 264,000 tons, and make all possible efforts for opening the tenders of the advertised quantity of 375,000 tons of sugar; (ii) TCP should manage funds from the credit limit assigned to it. Finance Division will, however, bridge finance the sugar procurement, which TCP undertook to repay, as soon as it received payments from the provinces for the open market operations; (iii) sale price at Utility Stores outlets will be Rs 55 per kg with immediate effect and, after Ramazan, the price differential will not be more than Rs 10 per kg from the average market price prevailing in Islamabad, Lahore and Karachi; and (iv) 100,000 tons of sugar, imported by TCP, will be offloaded in the open market at import price through provincial mechanism, starting from 28.7.2010. The provinces shall arrange for payment through their selected dealers as they lift the stocks from TCP well before Ramazan. After completion of the current sugar import process the market forces will be allowed to prevail and the private sector would be encouraged to import sugar.
The committee also recommended duty-free import of 500,000 tons of raw sugar till November 30, 2010 on first-come, first-served basis with a view to start the next crushing season early and to suitably augment the existing stocks in the current season.
On a query, the ECC was informed on July 29 that the required quantity of sugar to the provinces was being released on their specific demand. The respective provincial government will ensure cash payment to TCP through selected dealers, before lifting of sugar and will be sold in 'Sasta Bazaars' after allowing reasonable profit margin to these dealers.
On an inquiry, the Minister for Science and Technology said that Pakistan Standards and Quality Control Authority (PSQCA) has already approved the revised parameters of colour ICUMSA, sulphur dioxide and packaging of sugar. Since this relaxation was up to 30th September 2010, he was, therefore, requested to extend it up to 31st October, 2010, enabling TCP to complete its imports. ECC was, however, assured that there will be no shortage of sugar particularly during the Ramazan as sufficient stocks are available to meet the public demand/requirement.
TCP also pointed out that it has no funds to establish LCs for the tenders to be opened on 30th July and 7th August, 2010 and requested for provision thereof. USC informed the ECC that if the prices of sugar were not increased during Ramazan and subsequently, then the Corporation would be facing problems of leakages and black marketing. Moreover, due to upward revision of prices, the subsidy will also be decreased substantially. One view was that if import of raw sugar is allowed before crushing season it may depress the prices of sugarcane leading to lower returns to farmers.
After discussion, the ECC allowed continuation of revised specifications for import of sugar including packaging bags till 31st October, 2010 and directed the Ministry of Finance to arrange funds for TCP immediately for establishing the LCs for the tenders to be opened on 31st July and 7th August, 2010, respectively.
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