ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has decided to take Law Ministry on board on import of 0.3 million tons of white sugar through TCP as the plan involved over Rs 23 billion of national exchequer, well-informed sources in Commerce Ministry told Business Recorder.
On July 28, 2020, Ministry of Industries and Production informed the ECC that a meeting of Sugar Advisory Board (SAB) was held on March 18, 2020, during which it was observed that normal consumption pattern @ 0.442 million tons per month would mean that the estimated available stock of sugar amounting to 5.634 million tons would be adequate till December 2020 and there would be a remaining balance of 0.296 million tons at the time of the next crushing season. It was also discussed that the Covid -19 situation was likely to result in lower consumption than usual. Another SAB meeting was held on May 11, 2020 during which all the participants including PSMA and Cane Commissioners agreed that stocks were sufficient to last till December 2020. Further, Cane Commissioner Punjab pointed out that off-take would decline due to Covid-19 and it was endorsed by PSMA.
During the meeting it was decided that there were ample stocks and balance at the end of the crop year would be 0.271 million ton @ 0.442/month average, normal off-take /consumption pattern.
The review of the sugar stocks revealed that during the last SAB meeting held on May 11, 2020 it was indicated that sugar stocks were adequate till December 2020 and there would be a remaining balance also. However, the current stock position showed a drastic reduction of stocks by 50% as compared to the last meeting which meant that the stocks declined from 3.365 million tons to 1.685 million tons. As a result of this unusual decline the stocks' would last only till mid-November 2020, which was before the start of next crushing season.
As presented by Cane Commissioner Punjab during the SAB meeting the off- take/consumption pattern of Punjab in the last twenty days, i.e. from 2nd July till 23rd July 2020, was 0.620 million tons which was even higher than the national average monthly consumption of sugar which was 0.442 million tons per month. The Cane Commissioner Punjab also stated that there had been a change in the data sourcing and its methodology between the last meeting and the current meeting of SAB. It was further pointed out that overall consumption/off-take from [December 2019 till mid-March 2020 before Covid-19] was 0.389 million tons/month, from mid-March 2020 till mid-June 2020 it was 0.418 million tons/month, and from mid- June till mid-July 2020 the consumption/off-take was 1.041 million tons/month; this has resulted in a likely shortfall in November 2020 which could lead to price increases in the market. It was, therefore, agreed by all participants in the SAB meeting that in order to maintain a buffer stock and to pre-empt any possible shortfall the Trading Corporation of Pakistan (TCP) as the procuring agency should import 300,000 metric tons of sugar, at the earliest.
The Ministry of Industries and Production stated that TCP, the procuring agency, has provided its detailed working of landed cost if GoP decides to import 100,000 tons of refined sugar along with timelines regarding import from Gulf Countries/Brazil . In case of Gulf countries the actual shipping time/voyage time was 05 to 08 days and from Brazil the actual shipping time/voyage time was around 35 to 38 days.
Pakistan Standards and Quality Control Authority (PSQCA) has provided standards / specifications applicable for defining quality of the imported sugar. The two types are (i) specification 'A' relating to refined sugar and (ii) specification 'B' relating to white sugar, the difference between them being of colour and specification 'A' being higher in terms of price by US$ 10-15 as compared to specification 'B'.
The Ministry of Industries and Production further apprised that besides the shipping time already mentioned, the timelines specified in the PPRA Rules 2004 imply that imported sugar may not arrive by the time of the expected sugar shortfall.
Therefore, the following are the options that TCP as the procuring agency can adopt: (i) normal procurement, under PPRA Ordinance 2002 and PPRA Rules 2004, entailing minimum 30 days response time for receipt of bids or proposals from date of publication of advertisement or notice, and at least ten days between announcement of bid evaluation and award of contract (Rules 13 and Rule 35, respectively, of PPRA Rules 2004; or, (ii) TCP, the procuring agency may seek exemption from the specifics of Rule 13 as reflected in the proviso to that Rule (which will remove the minimum requirement of 30 days but maintain the requirement of 10 days); or, (iii) TCP, the procuring agency may conduct direct contracting [Rule 42(c)] by acting under Rule 42 (c)(v) (Annex-VII) and associated proviso (which would remove both the 30 days and 10 days requirement); or, (iv) . TCP, the procuring agency may conduct negotiated tendering as provided for in Rule 42(d) (Annex-VIII) (which would remove the 30 days and 10 days requirement.
Ministry of Industries and Production submitted the following proposals for consideration and approval of the ECC: (a) TCP may be allowed to import 300,000 metric tons of white sugar (specification 'B' as per PSQCA standards) through the option to be specified by the ECC and as procuring agency to obtain necessary exemptions / approvals to proceed to ensure arrival of stocks in adequate time; and (b) cash credit allocation of required funds approximating Rs.23.1 billion (on the basis of calculation shared by TCP for 100,000 metric tons.
During the ensuing discussion, the ECC observed that the current consumption of sugar was giving an indication of its possible shortfall in the country before the next crushing season, therefore, it would be appropriate to import the proposed quantity of sugar to maintain our buffer stock to avoid any shortfall in this regard. The forum agreed to allow import of up to 300,000 MT sugar.
The ECC also constituted a three-member committee under the chairmanship of Secretary, Finance Division, comprising Secretary, Ministry of Industries and Production and Secretary, Commerce Division to review in a holistic manner, the options for procurement of imported sugar by the TCP, in consultation with the Law and Justice Division, and submit a viable recommendation thereon to the ECC in its next meeting.
After detailed discussion, the ECC took the following decisions ;(i) allowed TCP to import 300,000 metric tons of white sugar( specification 'B' as per PSQCA standards); (ii) constituted a Committee under the Chairmanship of Secretary, Finance Division comprising Secretary, Ministry of Industries & Production and Secretary, Commerce Division to review in a holistic manner, the options for procurement of imported sugar by the TCP, in consultation with the Law and Justice Division, and submit a viable recommendation thereon to the ECC in its next meeting and ;(iii) directed the Ministry of Industries and Production to devise modalities regarding marketing/sale of imported sugar in consultation with concerned stakeholders and submit the same to the ECC for consideration.
Copyright Business Recorder, 2020