51 sugar mills refuse to accept TCP offer

December 16, 2013


Sugar mills
Sugar mills

Some 51 mills have refused to accept Trading Corporation of Pakistan”s (TCP) price matching offer for supply of sugar. As sugar mills have not accepted price matching offer, TCP can procure 10,000 tons of sugar as against a targeted quantity of 50,000 tons under the first sugar procurement tender.

Following the directives of the federal government, the state-run grain trader conducted first sugar tender on December 9, 2013 for the procurement of 50,000 tons. A healthy participation of local sugar mills was witnessed in the first sugar tender as overall some 54 mills submitted their bids.

During the examination of the received bids, price/evaluation committee of TCP found that out of total bids one bid is non-responsive, while the remaining 53 bids were declared valid as per the terms and conditions described by TCP.

All 54 mills submitted bids for different quantities with rates ranging from Rs 45,000 to Rs 58,000 per metric ton (including taxes). Two sugar mills, namely Al-Noor Sugar Mill and Shah Murad, submitted the lowest bids of Rs 45,000 per ton (including taxes) for quantity of 5,000 tons each. While, the highest bid was received from Khazana Sugar Mill, which offered to supply 5,000 tons of sugar at Rs 58,000 per ton (including taxes).

As both the lowest bids were meeting all the terms and conditions of the tender, TCP accepted both bids and accordingly a contract letter was awarded to M/s Al-Noor Sugar Mill and M/s Shah Murad for supply of 10,000 tons of sugar.

Meanwhile, following the previous practices, TCP offered price matching to remaining bidders to complete the 50,000 tons of sugar procurement under first tender. Sources said that TCP accepted the lowest bid on December 10, 2013 and asked the remaining 51 mills for price matching of the lowest bids in the next 24 hours. “Mills were asked to accept price matching offer till December 11, 2013 and respond to the state-run grain trader,” they added.

However, all the remaining 51 mills refused to accept the TCP”s price matching offer and till the deadline set for price matching not a single sugar mill showed interest to supply sugar at Rs 45,000 per ton.

Sources said unexpectedly TCP has received very low bid for the procurement of sugar and the remaining mills were unable to supply commodity at same price; therefore, they have not responded to the TCP”s price matching offer. Last month, ECC allowed TCP to procure some 150,000 tons of sugar from domestic mills to maintain its strategic reserves. In order to avoid any panic in the market, TCP was asked to procure sugar through two tenders. However, under the first tender as against the targeted quantity of 50,000 tons TCP can procure only 10,000 tons.

As per the procurement plan, TCP has issued its second tender for 100,000 tons of sugar, which will be opened on December 27, 2013 and sugar mills can submit bids for a minimum quantity of 2,000 tons and maximum quantity of 5,000 tons. It may be mentioned here that for the last three years, TCP is procuring sugar from domestic mills and it”s like a normal operation for the corporation. So far TCP has procured some 1.4 million tons of sugar from local mills during the last three years and the procured commodity is being sold through Utility Stores Corporation (USC) at subsidised rates.

Courtesy Business Recorder

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