Export of wheat to Iran: Mechanism to be finalised today

An inter-ministerial committee headed by Finance Minister Dr Abdul Hafeez Shakih will finalise implementation mechanism for export of one million tons of wheat to Iran on Friday (today), official sources told Business Recorder. 

The sources said Economic Co-ordination Committee (ECC) of the Cabinet considering the summary of Ministry of National Food Security and Research on “sale of wheat to Iran under barter trade” allowed the export of one million tons of wheat to Iran from PASSCO’s stocks at $300 per ton. It was also agreed that the federal government would pick up price differential of around $100 per ton. 

According to sources, after hectic and lengthy consultations both sides finalised modalities of the export on November 21, 2012 in Islamabad. To implement the already agreed one million tons of wheat export from PASSCO’s stocks to Iran, following was agreed: (i) 100,000 tons of wheat to be exported by the official channels; and (ii) the remaining 900,000 tons of wheat will be exported through the private sector. 

The sources maintained that both sides also agreed that “wheat barter trade may be converted into commercial sale of wheat”. As necessary arrangements have been made by PASSCO for the export of 100,000 tons of wheat, the following issues need clarity: (i) mode of payment – it was agreed that the Governors, State Banks of both the countries would decide on the mode of payment; and (ii) transportation of wheat to Karachi. Finance Division was supposed to provide funds for transportation and port handling charges. 

The sources said Governor State Bank of Pakistan had informed the Ministry of Commerce that the issue of mode of payment had become a little bit complicated as Iranian side was not opening an account in Pakistan to cover the cost of wheat. Additionally, Chief Executive Officer (CEO) Pakistan Steel Mills (PSM) has approached the Ministry of National Food Security & Research with the information that they are ready to purchase iron ore from Iran in lieu of wheat provided to them. Similarly, the Iranian Ambassador claims that Pakistan owed them money on account of electricity purchased for Makran. 

Under these circumstances, the committee will sort out the following issues for smooth export of wheat to Iran: (i) mode of payment to realise the cost of wheat; (ii) allocation of Rs 350 million to PASSCO for transportation of wheat from Punjab to Port at Karachi; (iii) concurrence of Ministry of Finance to pick up the cost differential and involved incidentals; and (iv) formal approval of the government. 

Copyright Business Recorder, 2013

Muhammad Ramzan Rafique
Muhammad Ramzan Rafique

I am from a small town Chichawatni, Sahiwal, Punjab , Pakistan, studied from University of Agriculture Faisalabad, on my mission to explore world I am in Denmark these days..

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