ISLAMABAD: A National Assembly panel "smelled a rat" in import of wheat as the bulk of the commodity has been and is being imported by only two private parties. Some of the members of the panel, including its head Syed Naveed Qamar and Rana Iradat Sharif Khan, maintained that wheat import by two parties indicates an "obvious cartelization".
Ministry of National Food Security and Research has allocated wheat quota to importers with specifications. On September 23, 2020, the panel was informed that the Department of Plant Protection (DPP), an arm of Ministry of National Food Security and Research, has issued import permit to 573 private importers for import of 2.890 MMT, with 18 vessels booked for 1.20 MMT of imported wheat till November, 2020.
Letters of Credit (L/Cs) have been opened against 0.540 MMT, and the remaining will be opened 15 days before sail of vessels as per standard routine, 6 vessels have already arrived carrying 0.432 MMT, 6 vessels are expected to arrive in mid-October, 3 in mid- November, and 3 in mid-December, 2020. Further import is also expected in January and February 2021. The discharged 207,881 tons of imported wheat has been distributed to Punjab (116,552 tons), KP (4,893 tons) and Sindh (86,436 tons). Import parity ranges from $ 229 to 268/- ton.
According to documents of Ministry of National Food Security and Research, in August Chappal Group imported 60804 MT of wheat. In September, Mikri Group imported 64804 MT, 69400 MT, 68010 MT and 65,000 MT whereas Chappal Group also imported 54060 MT and 55000 MT.
In October 2020, Chappal Group will import 180,000 MT in three vessels while Mikri Group will import 110,000 MT (two vessels of 55,000 MT) each. Punjab Four Mills will also import 60,000 MT. The total imported and booked quantity of wheat is 787,078 MT.
Further three vessels are expected in November, one in December and one in January 2021. Total 18 vessels are planned by the private sector till January 2021.
The TCP's first two ships of 55,000 MT each from Ukraine will arrive on October 8, 2020, whereas third ship of 57,000 MT from Russia will arrive on October 15. Two more ships of 163,000 MT from Russia will arrive in December 2020 and January 2021.
On August 21, 2020, ECC modified its earlier decision of August 4, 2020 (wherein TCP was permitted to import 1.5 MMT of wheat) and allowed TCP to import 0.2 MMT wheat on behalf of Passco and directed Ministry of National Food Security and Research to confirm the requirements of other provinces (Sindh and KP Food Departments have endorsed the quantity of 0.150 MMT each on terms and conditions of the TCP).
TCP allowed import of 1.50 MMT of wheat. Initially 3 recipients endorsed the quantity of 1.50 MMT i.e. Punjab (0.70 MMT), KP (0.30 MMT) and PASSCO (0.50 MMT). Later on, Sindh also sent a demand of 0.150 MMT of imported wheat by the TCP. However, KP Government has now submitted its request for an additional quantity of 0.30 MMT of imported wheat by the TCP, in addition to 0.150 MMT already endorsed. TCP allowed import 0.2 MMT on behalf of PASSCO.
PASSCO and KP Government have signed an MoU for 0.50 MMT and 0.150 MMT, respectively, whereas, agreement with Punjab and Sindh is still pending.
TCP has arranged to import 0.330 MMT of wheat @ $ 233.85/- ton, which is expected to arrive during October, and November, 2020.
For further quantity of 0.170 MMT, TCP has floated tenders. Previously, tenders for the lowest bid was US$ 2741per ton which was trashed due to higher prices
The Ministry argues that at this stage the government has to monitor exclusively the demand and supply, pricing trend, crop condition and weather forecast.
"If all is well then we have to curtail further imports in the wake of arrival of new harvest from Lower Sindh, which normally begins from mid- February. This step will ensure implementation of MSP mechanism in the country, otherwise wheat prices will crash due to a glut in the local market," said the Ministry.
However, insiders claim that in December wheat crisis will be worse than the previous and existing months. The price of imported wheat is Rs 2700 per 40 kg which will be sold to the flour mills at Rs 1475 per 40 kg, which implies that the government has to give subsidy of Rs 1225 per 40 kg. The total subsidy will be around Rs 54 billion. The main reason for the wheat crisis in Punjab is uninterrupted supply of wheat to KP, of which a substantial quantity is smuggled to Afghanistan and/or Central Asian States.
Copyright Business Recorder, 2020
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