Cabinet relaxes PPRA rules

The Cabinet has relaxed PPRA Rules 2004 for price matching of 178,000 tons of sugar at the lowest rate of Rs 46,250 per ton, sources close to TCP Chairman told Business Recorder. They said that the Cabinet was informed that the Committee constituted by the ECC to assess actual requirements of sugar import has authorised the Trading Corporation of Pakistan (TCP) to purchase 200,000 tons of sugar from domestic market.
Tender was published on November 4, 2011 and opened on November 12, 2011. Minimum price quoted by the millers was Rs 65,000 per ton. Offer was reduced to Rs 63 per kg in price rationalisation meeting on November 21, 2011. As the price continued to decline in the open market, ECC in its meeting on December 15, 2011, decided to re-tender for procurement of 200,000 tons of sugar, with the direction that TCP would decide the price, and award the contract, at its own level.
In pursuance of the ECC decision, TCP floated tender for purchase of 200,000 tons sugar. Following bids were received: (i) 65 bids were received for total quantity of 441,000 tons; (ii) all bids were fulfilling mandatory tender requirements; (iii) Hussain Sugar Mills and Shekhoo Sugar mills offered the lowest rate of Rs 46,250 per ton for a quantity of 10,000 tons each; and (iv) other offers ranged from Rs 47,750 tons to Rs 50,350 per ton.
Sources said that TCP awarded contract to the two lowest bidders for a total quantity of 20,000 tons for sugar. Consent/willingness of the bidders was ascertained for price matching. In response, 45 bidders offered to match the lowest price for total quantity of 358,000 tons.
TCP is awarding contracts for remaining 180,000 tons on pro rata basis. The balance 178,000 tons is available at the same price. Wholesale price of sugar in Karachi and Lahore as on January 2, 2012 was Rs 50/40 kg. Therefore, it is advisable to procure the balance quantity of 178,000 tons quoted at Rs 46.25 per kg.
According to sources, ECC was requested in its meeting on January 3, 2012 that relaxation/ exemption from the relevant provisions from PPRA rules 2004 for price matching and balance bid quantity of 178,000 tons in excess of originally approved 200,000 tons against this tender at Rs 46,250 per ton be allowed.
The ECC approved the proposal, subject to the condition that PPRA Rules exemption for price matching be removed and approved by the Federal Cabinet as it is the mandate of the Federal Government/Cabinet to allow any relaxation in PPRA Rules.
When contacted, PSMA Chairman Javed Kayani appreciated the decision of the Cabinet to buy the entire offered quantity at Rs 46.25/kg. He said the international market is supportive of the disposal of surplus stocks where the sugar industry can still fetch about Rs. 57 with out the incidence of taxes.
"We would like to help the Government for the welfare of consumers to build their strategic reserves, but strongly urge that the process should continue without any interruption to ensure timely payments to growers," he added.
Javed said that prospects of the crop are not as per initial estimates in Sindh because of recent rains and floods which had grossly affected the recovery of sugarcane but maintained that there would still be a sizable production of about 4.7 million tons.
He said that as the ban on export still persists, it is imperative that TCP should be directed to lift the surplus, which is vital for the industry and the growers.