KARACHI: The Trading Corporation of Pakistan (TCP) will require some Rs 17 billion financing from banks for procurement of 0.33 million tons white refined sugar.

The Economic Coordination Committee (ECC) of the Cabinet on Tuesday asked the state-run grain trader to procure some 330,000 tons of sugar from domestic sugar mills, which are facing financial crunch followed by decline in the commodity prices and slow sales.

Following the directives of the ECC, the corporation is making arrangements to procure sugar and is likely to issue procurement tender during next week. Presently, the TCP officials are waiting for written official directives from federal government.

Sources said the ECC decision will require a massive amount to ensure timely payment to sugar mills. “Overall some Rs 17 billion will be needed for the procurement of 330,000 tons of the commodity from domestic mills as presently sugar price stands at Rs 50 per kilogramme in the local market,” an official said.

He said presently the TCP’s credit limit stands at Rs 137 billion, of which some Rs 126 billion have already been consumed. Therefore, some additional amount will be required to make payments.

The TCP is continuously receiving outstanding payments form different government entities and it is expected that till the start of payment to mills, the corporation’s credit limit will have some cushion to meet sugar procurement financing.

“There is also flexibility with regard to the credit limit by the government as well as by banks and it can be enhanced any time, when we need extra financing for the commodity operation,” he said.

The TCP has availed over Rs 160 billion credit facility and we are confident that financing needs will be fulfilled without any difficulty, he added.

Although, the ECC has not finalized procurement modalities, however, it will be as per past practices, he said and added that previously sugar procurement was done through open tenders.

Appreciating the ECC decision, he said that with procurement of 330,000 tons of sugar, TCP’s stocks will reach nearly 0.5 million tons, sufficient enough for next 10 months as monthly some 50,000 tons of sugar is being released. This will ensure uninterrupted supply of the commodity at lower rate till the next crushing season, he added.

For the last two years, TCP is procuring sugar from domestic mills and it’s like a normal operation for the corporation. So far, the TCP has procured some 678,000 tons of sugar from local mills during last two years and the procured commodity is being sold through Utility Stores Corporation (USC) at subsidised rates to facilitate masses.