Export of 30,000 tons of wheat to Iran approved by government

May 25, 2013

MUSHTAQ GHUMMAN

Wheat Export 2013
Wheat Export 2013

Pakistan has approved export of 30,000 tons of wheat at subsidised rate to grain hungry Iran on government to government basis out of the 100,000 tons on immediate basis on the request of Iranian Embassy in Islamabad.

Official documents available with Business Recorder, reveal that the federal cabinet was informed on May 16, 2013 that consequent upon the decision taken in a meeting between the Presidents of Pakistan and Iran in February, 2012 for enhancement of bilateral trade including barter trade, the Economic Co-ordination Committee of the Cabinet in its meeting held on March 13, 2012 decided to explore the possibility of barter trade arrangement between Pakistan and Iran for export of one million tons of wheat and 0.2 million tons of rice.

The Cabinet was further informed that after several meetings with Iranian side finally an agreement was signed on November 21, 2012 for export of one million tons of Pakistani wheat to Iran. The salient features of the agreement are as follows: (i) 100,000 tons of Pakistani wheat would be traded on Government to Government basis; (ii) remaining quantity of 900,000 tons would be sent through private parties. Government of Iran will nominate Pakistani private parties who will be handed over wheat on Free on Board (FoB) basis; (iii) price of the wheat would be $300 per ton on the basis of FoB basis stowed and trimmed on one or two safe berth(s) Port Qasim/Karachi Port Trust, Karachi; and (iv) cargo insurance would be arranged by the buyer and insurance cost would be on the buyer”s account and the underwriter”s name would be mentioned on all documents.

It was stated that Government of Pakistan had agreed to sell wheat at $300 per ton as a gesture of goodwill towards Iran. On account of transportation charges and current international price of wheat, the price differential works out to be approximately $70 per ton which is to be picked up by the Government in the light of ECC decision of August 6, 2012. It was stated that National Transmission and Dispatch Company (NTDC) of Pakistan has confirmed that they owe more than $53.21 million to M/s TAVANIR Iran for supply of electricity. The Government of Iran has asked that this amount may be offset against supply of wheat from Government sector, PASSCO and other commodities to be supplied by the private sector to Iran.

The Iranian side has also authorised that $9 million may be adjusted (withdrawn) from the account of TAVANIR with NTDC and given to PASSCO for provision of 30,000 tons wheat to Iran. The Cabinet was further informed that the Iranians need wheat shipment at a rather short notice to meet their urgent requirements. The Iranian inspectors have already inspected the exportable wheat at the storage sites in Pakistan. The approval of the Cabinet is solicited for the following: (i) approval of the agreement signed between PASSCO and Trading Corporation of Pakistan (TCP) on November 21 2012. Ministry of Commerce would serve as the concerned Ministry for the export of commodities by the private parties; (ii) release of outstanding dues, by the Finance Division, that have accrued in favour of NTDC; (iii) offsetting of dues payable by NTDC to TAVANIR, Iran by means of payments by NTDC for exports against 30,000 tons wheat (amounting to $9 million) to PASSCO; (iv) opening of the account for depositing the amount owned by NTDC to TAVANIR Iran and payment of export proceeds to the exporting entities out of the said account; and (v) transfer in rupees equivalent to $9 million to PASSCO”s account for the supply of 30,000 MT of wheat.

The sources said caretaker Minister for Water and Power, Dr Mussadik Malik opposed subsidy of $70 per ton on wheat to Iran arguing that when the government is unable to extend subsidy to its own people then why to Iran. According to sources, Water and Power Minister faced the wrath of his colleagues on his remarks. However, Prime Minister Mir Hazar Khan Khoso calmed the cabinet colleagues.

After detailed discussion, the cabinet also decided that price mechanism will be determined by the National Food Security and Research Division in consultation with Commerce, Finance and Water & Power Divisions on reciprocal basis and equal terms in the best national interest and brotherly relations between the people of Pakistan and Iran. Business Recorder

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