Generating funds to open LCs: TCP directed to auction 50,000 tons of sugar in open market
ISLAMABAD (September 28 2010): The Trading Corporation of Pakistan (TCP) has been directed by the federal government to auction 50,000 tons of imported sugar in the open market to generate funds for opening of letters of credit (LCs) for the remaining contracted quantity of sugar, sources close to Secretary, Industries, told Business Recorder here on Monday.
There are apprehensions in government circles that ‘influential groups’ ie sugar mill owners or stockists, may procure the auctioned sugar and set a high price in the local market, but the TCP Chairman is reported to be determined to foil any such attempt, by tailoring the tenders.
Sources said that the Economic Co-ordination Committee (ECC) of the Cabinet was informed on September 21, 2010 that the ministerial committee, which was mandated to come up with its recommendations on import of raw sugar, had met twice on August 16 and September 16, 2010. In its second meeting of September 16, 2010 the committee formed a subcommittee to give its recommendations after looking into all facts of the issue.
The ECC was further informed that the Pakistan Sugar Mills Association (PSMA), in the ministerial committee’s meeting on September 16, 2010, had proposed to import 0.5 million tons of raw sugar for equitable distribution based on past three years’ sugarcane crushing by the sugar mills.
In another communication, seven sugar mills, affected by the floods in Punjab, have especially requested allocation of raw sugar. According to sources, the ECC was further informed that importers of sugar were invited to the September 16 meeting, who requested the government to allow raw sugar import at zero duty immediately. They also demanded similar concessions for the private sector and assurance that there would be no government intervention, as in other commodities.
Sources further said that the Secretaries’ subcommittee, in view of the shortfall worked out by Minfa, agreed to import 0.7 million tons of raw sugar through private sector, instead of 0.5 million tons as was proposed by the PSMA. “There were apprehensions that if the private sector is allowed to import raw sugar, then sugar mills will involve themselves in refining it. Consequently, crushing operation will be delayed; resultantly, the price of sugarcane will also fall, thus adversely affecting the growers,” sources said.
The TCP Chairman, who has been accused of violating Constitution of Pakistan by the Law Ministry, showed inability to open LCs for import of sugar for want of funds. He requested that either funds for LCs may be provided, or TCP may be allowed to auction 50,000 tons of sugar in open market.
Recently, in a talk with this correspondent, the TCP Chairman had stated that he would tailor the sugar auction tenders in such a way that ‘front man’ of influentials would not be able to enter the process. However, some reports suggest that influential parties are making efforts to offer high price in the auction so that they could set new benchmark market price. The ECC has directed that the TCP should no longer engage in sugar import business in future due to which this lucrative avenue has been closed for some unscrupulous officials who are now seeking new avenues of corruption.