TCP refuses to procure excess quantity of sugar

Following the directives of the ministry of finance, Trading Corporation of Pakistan (TCP) has refused to procure excess quantity of sugar, offered by the domestic sugar mills in response to a price matching formula.
Sources told Business Recorder on Monday that the TCP had completed its sugar procurement of 100,000 tons from the local mills as the ministry of finance had asked the TCP to make procurement as per tender and not to procure excess quantity offered by the mills.
The decision had been taken reportedly after the latest development, in which the Economic Coordination Committee (ECC) of the Cabinet allowed the sugar mills to export some 0.1 million tons of sugar, sources added.
The TCP opened its sugar procurement tender on January 31, 2012 and received 53 bids from local sugar mills quoting rates ranging from Rs 45,720/- to Rs 50,000/- per ton. The tender was for procurement of 100,000 tons of sugar, while the received bids were for supply of 263,000 tons of sugar.
Initially, the TCP accepted two lowest bids of M/s Hunza Sugar Mills Unit-I and M/s Hunza Sugar Mills Unit-II as offer of both the mills was equal and lowest. The TCP after procuring 10,000 tons of sugar from the bidders asked rest of the participants, who quoted higher rates in the tender, to match the lowest bid price aimed at achieving the procurement target of 100,000 tons.
In response to the TCP's offer, some 35 mills showed their willingness to match the lowest price, while, the offered quantity was also much higher than the target. These 35 mills offered to supply some 170,000 tons sugar at lowest price of Rs 45,720 per ton as against the TCP's remaining target of 90,000 tons of sugar procurement.
Therefore, after receiving an excess quantity offers by the sugar mills, the TCP decided to approach the federal government to finalise the sugar procurement quantity. It was being expected that the federal government would ask the TCP to procure complete quantity of 170,000 tons of sugar offered by the mills. However, the ministry of finance decided not to procure an excess quantity of sugar from the domestic mills and asked the TCP to complete procurement as per target/tender.
As a result, the TCP, after procuring 90,000 tons of sugar on pro rata basis from 35 mills, had refused to procure the remaining offer of some 80,000 tons of sugar, sources said.
They said that in the first sugar procurement tender, the TCP had purchased 378,000 tons of sugar worth Rs 17.5 billion, out which it had made over 80 percent of payment to the millers.