Revealed: What's delaying sugar imports, why did TCP scrap the first sugar import tender?

KARACHI: Following the directives of the federal government, the Trading Corporation of Pakistan (TCP) has scrapped the first sugar import tender as quoted prices were found to be much higher.

In order to control the soaring prices of sugar in the domestic market, the federal government decided to import some 0.3 million tons of sugar. Accordingly, TCP was given a task to import sugar on a highly priority basis to avoid a shortage in the local market.

The state-run grain trader, issued on August 8, 2020 international tender for the import of some 0.3 million metric tons sugar and the tender was opened on August 18 at TCP head office. However, the response from international bidders was very poor due to strict tender's terms and conditions.

Some five bidders participated in the tender and out of these only two parties showed interest in the supply of sugar while the remaining suppliers submitted regret letters.

The lowest bid was received from Al-Khaleej, which offered to supply sugar at $471 per metric ton for DPO (Delivered at Place Unloaded), $ 459 per metric ton for bulk and $453 per metric ton for containerized shipment. The second lowest bid submitted by M/s Coral, which offered to supply sugar at $474 per metric ton in bulk.

Sources said that TCP also held a pre-bid meeting with the potential bidders of sugar on August 13, 2020 for discussion on the tender terms and conditions. Accordingly, a number of amendments were suggested by the interested parties and TCP management assured these amendments in the tender.

However, reportedly, the Executive Committee of Management (ECM) only made a few amendments, while some suggestions including sugar specification were not made despite knowing that it may result in lower participation in the tender.

Sources said the condition of Granulated Sugar (Bold to Medium) was a major reason for lower participation in the sugar tender. Some of the interested suppliers in the pre-bid meeting raised this issue and requested the TCP to include the "Fine to Medium" in commodity specifications.

TCP's official assured the meeting participants that this amendment would be made but this suggestion was completely ignored.

Some suppliers even sent a reminder to the TCP for inclusion of "Fine to Medium" commodity specifications in the bid documents for competitive bids, but TCP did not address this amendment.

Sources said that the quoted prices in the sugar tender were some $30-40 per metric ton higher than the prevailing market prices; therefore, following the directives of the federal government TCP has decided to scrap the sugar import tender.

TCP is waiting for some approvals from the federal government to issue a fresh sugar tender. Sources said that there is a need to change the specification of the tender from "Bold to Medium" to "Fine to Medium", otherwise, the participation will remain poor in the next tender.

It may be mentioned here that the federal government has also allowed the private sector to import duty free sugar for local consumption and this will help to bring down the sugar prices.

Meanwhile, for wheat procurement tender, TCP has decided to award the tender to the lowest bidder at $ 233 per metric ton for supply of 0.2 million tons wheat. TCP has also asked the remaining bidders for price matching to complete the tender quantity of 0.5 million tons of wheat. The last date for price matching is August 26, 2020.

Copyright Business Recorder, 2020