Trading Corporation of Pakistan (TCP) has received a good response to its tender to hire commission agents for the sale of cotton as overall seven parties offered their services. Last month, following the directives of the federal government, the TCP issued a tender to hire the services of commission agents for the sale of 84,600 lint cotton bales, procured last year to stabilize the commodity prices in the domestic market.
The state-run grain trader invited bids on the directives of the Economic Coordination Committee (ECC), which allowed the TCP for retail sale of cotton on daily basis at Karachi Cotton Association (KCA) rates for timely offloading of procured cotton stocks.
Earlier, the TCP was asked to sell cotton stocks through tenders at a reserves price. However, textile millers or traders were reluctant to procure cotton through tendering process due to the imposition of 10 percent advance tax on the purchase of cotton. Overall, response was very poor because of advance tax and TCP hardly sold some 10,800 cotton bales through eight tenders.
Therefore, the TCP proposed cotton sale on retail and daily basis at Karachi Cotton Association (KCA) rates as advance tax is not implemented on retail sale of commodity. Accordingly, the ECC approved the same to immediately offload cotton stocks. Under the proposal, the TCP is required to appoint commission agents, who will market the procured cotton and make efforts for sale of commodity.
The commission agents will obtain offers from the interested parties/ millers/ traders and coordinate with the TCP for sampling acceptance of quality by the buyers on/ or above the reserves sale price for respective lots. In response to the TCP tender, opened last week for hiring of commission agents, some seven parties have agreed to serve as commission agent of the TCP for the sale of lint cotton lying in Pepri Godown.
M/s Babar Corporation is the lowest bidder as it is agreed to serve as commission agent at a commission of 0.22 percent in term of percentage of sale price. AA Cotton industries offer 0.40 percent, Lucky Brothers, 0.49 percent, Rashid & Brothers 0.50, Neelam Cotton Corporation 0.50 percent, Neaseem Usman & Sons 0.70 percent and Cotton Hub offered services at 1 percent commission.
Sources said that bid evaluation has been completed and all bids are responsive, however as per the PPRA rules, the TCP is required to display the evaluation report for ten days for objection, therefore state-run grain trader's evaluation committee will take a final decision on the received bid in the next week.
As per tender documents, applied commission agents should have a minimum 5 year experience in cotton handling and will act as commission agent on behalf of the TCP for the sale of cotton to the interested parties. It may be mentioned here that in order to stabilize cotton prices in the domestic market, the federal government, in November 2014, directed the TCP for the procurement of cotton from ginning factories to facilitate the farmers. Accordingly, the TCP spending some Rs 3 billion procured some 95,400 cotton bales from ginners at a support price of Rs 6,864 per maund.
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