0.5 million tons raw sugar import: TCP again trying to favour Dubai-based firm

[Naveed Yaseen]

IQBAL MIRZA
KARACHI (November 12 2009): Trading Corporation of Pakistan (Pvt) Ltd (TCP) is at it once again. For all intents and purposes, it appears that the 2009-10 sugar policy, approved by the Cabinet for import of 0.5 million tons raw sugar and another 0.5 million tons white sugar has come as a windfall for the Corporation and its abettors.

Apprehending that it may be tasked to import the required sugar, TCP machinery has been geared up to prepare tender documents so as to favour its favourite supplier at exorbitant prices, notwithstanding the colossal loss the country may suffer in case the deal goes through.

According to well informed sources, major world supplier of sugar is Brazil and all importing countries who import raw sugar, including the biggest buyer India, import raw sugar in bulk with cargo size 40,000-50,000 tons to take freight advantage of big vessels. On the contrary, TCP, in order to favour its favourite is recommending to Finance Secretary to import raw sugar in bags with the reasoning that shipment in bulk would deteriorate the quality of raw sugar.

This is an absolutely flimsy reason as no country in the world including India imports sugar in bags. It is unheard of in trade because of unreasonably high prices because bagging cost in foreign countries is sky-high, compared to cost in Pakistan. Why pay for expensive bags when Pakistan produces bags locally at much cheaper prices? Why pay higher bagging cost when the same cost is much cheaper in Pakistan? sources questioned.

It is a proven fact that there is no deterioration in quality if shipment is in bulk, but if there is, then why are all the importing countries including India and Indonesia importing raw sugar in bulk.

Another recommendation, which TCP has in mind to forward to the Ministry of Finance, sources said, is to ship out 0.5 million tons in containers. This is another unheard of move. No country in the world including India and Indonesia, when buying big quantities of raw sugar, import in containers when they can easily take advantage of low freight rates for big bulk vessels of 40,000-50,000 tons.

The reasons given in this case by TCP are that the cargo size in bulk shipment is 12,500 tons; as such 40 ships will arrive in Karachi, which would be difficult to handle in the crushing season. All the TCP has to do is to look into the past few years when the sugar mills imported raw sugar and all ships that arrived in Karachi were of 40,000 ton size, and in bulk.

Why should TCP so blatantly try to mislead the authorities? sources asked. The tailor-made conditions the TCP is endeavouring to formulate suit only one party, based in Dubai, which has raw sugar lying in its refinery and can easily bag it and ship it in containers to Karachi.

It is impossible to get hold of 20,000 containers to ship out raw sugar from Brazil in a short period so that sugar can arrive during the crushing season. Just to favour one party in Dubai, the country would have to pay a nail-biting price. In whose pocket this money would go? This is the big question that saner elements in the government should be asking, sources said.

TCP has suggested to Finance Secretary that following options may be considered before it is asked to issue tenders for the import of 0.5 million tons raw sugar. One of the options below drafted by the TCP makes a crafty and deceitful reading: The world sugar prices are showing bullish trend.

In this situation it is apprehended that the news of importing 0.5 million tons raw sugar will create a panic in the international sugar market resulting in the price to shoot up. To overcome this situation TCP has to float at least 10 tenders in staggered and manageable size of 50,000 tons with the responsive time of at least 15 days as against Public Procurement Regulatory Authority's (PPRA's) required responsive time of 30 working days for international tender.

Other options: Allocation of quantities to sugar mills may be made by Ministry of Industries & Production under intimation to TCP. All nominated sugar mills will be required to lift the quantities as per their allocation directly from the port and all cost of transportation and container handling charges will be borne by them.

About 20,000 containers of 25 tons each will arrive at Karachi port. To avoid demurrage at container yards, mills will have to lift the containers swiftly within the stipulated time. In case sugar arrived in break bulk (in bags) about 40 vessels will arrive, each of 12,000 tons sugar. In that case, priority berthing will be required to avoid demurrage on port.

Meanwhile Adil Gilani, Chairman of Transparency International Pakistan (TIP), had sent a letter to TCP Chairman Saeed Ahmed Khan on October 10 drawing his attention to the violation of Public Procurement Rules-2004 in TCP procurements of raw sugar from world-wide sources.

TIP had received a complaint that TCP is again manipulating import of 500,000 tons raw sugar from a specific supplier in UAE. Complaint that a proposal of TCP has been going the round in the Ministry of Finance about pros and cons of importing raw sugar in containers instead of importing it in bulk.

Gilani said: TCP in the last 12 months has imported white sugar, all from UAE from a specific supplier, and managed to alter the terms, conditions and specifications to suit this particular exporter. One way or other, this exporter has been able to get the specifications changed.

This time also, TCP is recommending to get approval for the import of raw sugar in containers, and exemption from PPRA to reduce the time of tender from 30 days to 15 days, and stagger the tender in small batches of 12,500 tons, total 40 batches, and in 2/12 months.

Such terms and conditions, which have been reported earlier also by TIP as one manufacturer-specific are not allowed in the PP Rules No 10 & 32. TIP has asked TCP to inform whether the complaint is true; and if it is, on what grounds TCP is violating PPRA rules and asking for exemption from these rules. TIP stood for transparent implementation of the Rule of Law, Gilani said.

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