Shipping of imported wheat: Minister unhappy over not giving first right of refusal to PNSC

ISLAMABAD: Minister for Maritime Affairs, Ali Zaidi, is reportedly unhappy over not giving first right of refusal to Pakistan National Shipping Corporation (PNSC) for shipping of imported wheat, well informed sources told Business Recorder. The Minister, sources said, raised this issue at a recent meeting of Federal Cabinet, which has already issued directions in this regard. During the meeting, it was highlighted that despite the decision of the Cabinet the first right of refusal was not being given to PNSC by the concerned Ministries which could save the country valuable foreign exchange.

Adviser to the Prime Minister on Commerce and Investment, Abdul Razak Dawood explained that the directions of the Cabinet could not be complied with to avoid any delays in this urgent matter.

The members noted that the procurement price of imported wheat should not have been brought to the ECC and Cabinet as under PPRA Rules this fell under the purview of the Division. It was highlighted that the Division was reluctant to take a decision on the issue, and due to the urgency and sensitivity of the matter, the decision could not be delayed.

On October 26, 2020, Ministry of National Food Security and Research stated that the ECC in its meeting held on October 15, 2020, on a summary submitted to it, approved, in principle, securing additional quantity of wheat from Russia on Government to Government (GTG) basis through Trading Corporation of Pakistan (TCP). MNFS&R was also directed to submit a summary stating specific details of such additional quantity, price and transportation modalities. Prior to the ECC meeting, Price Negotiation Committee (PNC) set up by ECC, comprising Secretaries of Ministries of Finance, Commerce and MNFS&R, finalized modalities with the representative of Prodintorg, Russian Joint Stock Company, for provision of 300,000 MT of wheat at $ 282.50/- MT. The price offered by Prodintorg was lower by $ 1.5/- MT, as compared to the lowest bid of $ 284/- MT, received by TCP. PNC asked Prodintorg to match or make further offer for the remaining quantity of 320,000 MT. After, in principle, approval of ECC, Prodintorg confirmed delivery of 300,000 MT wheat at $ 282.50, which would be delivered by end of December, 2020. Subsequently, Mikhail Potapov, Director General, Prodintorg sent a letter and confirmed the arrangement. Mikhail also expressed that Russian local market was currently extremely high due to massive wheat buying by various countries, including Pakistan, Turkey, Egypt, Jordan and others. Despite sufficient availability of wheat in Russia, the local farmers have increased the price. He reaffirmed that one million tons of additional wheat at lower rate was possible, provided Pakistan stops further buying/tendering and sends no further buying signal to the market. Concurrently he offered additional quantity of 320,000 MT wheat at $ 288/-MT within shortest possible period.

Ministry of National Food Security and Research further noted that given the aggregate quantity of imported wheat in public and private sectors as well as ports and logistic capacity to handle release and transport of wheat, it would be appropriate to reconsider further import of wheat. MNFS&R proposed that further tendering may be stopped for the time being and TCP may resort to GIG option keeping in view additional requirements of wheat.

On the basis of wheat procurement, TCP has indicated its tentative vessel arrival schedule till January, 2021. It has also been stated that the schedule may be affected due to inclement weather like snow fall at the loading port etc.

According to the Ministry, four vessels of 220,000 tons imported wheat have reached while six vessels of 223,000 tons will reach in November, six vessels of 342,000 tons in December 2020 and two vessels of 215,000 tons will come in January 2021.

Ministry of National Food Security and Research apprised that the ECC, in its meeting held on September 17, 2020, endorsed the firm demand of provincial governments to the extent of 1.50 MMT, which included 0.70 MMT for Punjab, 0.30 MMT for KP and 0.50 MMT for PASSCO. Accordingly, MNFS&R allocated wheat proportionately, as per arrival of vessels, to the provinces, keeping in view their demand. Lately, KPK had requested an additional wheat of 0.15 MMT and Sindh 0.15 MMT wheat.

On a complaint appearing in the newspaper, regarding strike of transporters against axel load regulations and local police intrusion, Chief Secretary, Government of Sindh and Ministry of Communications were approached to resolve the matter on priority. ECC was requested to advise Sindh Government to facilitate smooth transfer of wheat to other provinces by easing axel load regulations and passing necessary directions to the police.

In pursuance of GIG agreement between Russia and Pakistan, PASSCO has negotiated the commercial contract with its counterpart Prodintorg, therefore, approval of the ECC was required for exemption under Rule 5 of the PPRA Rules read with PPRA's S.R.0.719 (1)/2011, of July 18, 2011, which provides "whenever a sponsoring Ministry/ Division is of the view that prospective procurement are required to be made by invoking Rule-5 of Public Procurement Rules, 2004, it shall bring a case to the ECC after undertaking due consultations with the stakeholder Ministries/ Division/Departments etc. as prescribed in the Rules of Business, 1973.”

Copyright Business Recorder, 2020