Pakistan Agricultural Storage and Services Corporation (Passco) has decided to offload some 0.6 million tons of wheat stocks at Rs 1,100 per 40-kg (without bags) in the domestic market, a move aimed at stabilising the commodity prices. Sources told Business Recorderon Monday that following the federal government directives, Passco is going to initiate the second phase of wheat offloading as it has sufficient stocks, which needs to be sold in the market before new crop.
Presently, Passco has wheat stocks of over 2 million tons and after current proposed sale, it will have stocks of 1.4 million tons in its godowns as strategic reserves. Sources said flour mills will be given top priority in the second phase of wheat sale, while applicants who have been entertained in phase I will not be allowed to participate in the phase II.
Tender for the sale of wheat crop 2011-12 is expected to be released by the corporation during this week. This will help reduce the wheat grain prices in the domestic market as well as to retire billions of rupees financing obtained from banks for wheat procurement. The government has already fixed a rate of Rs 1,100 per 40-kg without bags for sale of wheat.
Sources said Passco has also decided to effect some changes in the second wheat tender. With an aim to enhance the participation of the maximum parties in the upcoming tender, Passco has fixed a minimum quantity of 500 tons and maximum bid quantity of 2,000 tons per applicant compared to 5,000 tons in the first tender. While, down payment will remain 25 percent like previous tender.
Passco will sell wheat on “first come first served” basis. However, proportionate wheat quota for provinces has been fixed and a quantity of 200,000 tons will be sold to Punjab, 150,000 tons to Khyber Pakhtunkhwa, 100,000 tons to Balochistan and 150,000 tons to Sindh based parties. Applications for sale of wheat will be received from March 12, 2013 onward during the working hours at Passco head office. The corporation has also made it clear that applications submitted prior to the date of the advertisement in newspapers of this sale will not be considered.
As per conditions, first three days of sale will be exclusively for flour mills, however in case they fail to apply within these three days, the leftover quantity, if any, will be offered to traders, etc. The wheat is of crop 2011-12 fair average quality and will be sold on “as is where is” basis. Loading and any other miscellaneous charges will be borne by the buyer and he will be responsible for lifting the commodity from the designated storage points of Passco. Advance payment in full will be made before lifting of the required stocks and minimum lifting quantity of wheat will be 500 tons.
Applicants will be required to submit down payment of the desired quantity in shape of bank draft/pay order, payable at any branch in Lahore in the name of Passco. While, no cheques/cash/CDRs or any other mode of payment will be accepted as down payment. The down payment will be adjusted in last consignment.
Sources said all applications will be received in person or by authorised representative only and no applications will be received/entertained through mail or any such medium. In addition, only one application will be submitted by the applicant or his representative and no person can represent more than one applicant.
Passco has said that all applications must be on the letterhead of flour mill owners with bona fide credentials and in case the owner is unable to attend, an authority letter authorising his representative must be attached with application. However, a cop of identity card of the owner as well as valid NTN certification of the firm will be required along with application.
In case of default, 2 percent as penalty of the total amount of contracted quantity will be deducted out of 25 percent received as down payment. Entire lifting period would be 30 days from the date of signing of the agreement and no further extension will be allowed.
The corporation has also made it clear that in case of any dispute between the parties, this will be decided by the arbitrator, which will be MD Passco. While in case of litigation between parties hereto, the court at Lahore shall have the exclusive jurisdiction to entertain such dispute.
Passco has already sold some 0.4 million tons of wheat stocks during January this year, of which some 0.2 million has been lifted by the buyers, while the remaining lifting has been stopped by the corporation on the directives of the Supreme Court. First wheat tender was opened by Passco on January 21, 2013 for the sale of 0.4 million tons of the commodity. Passco successfully auctioned wheat at two different prices. Some 22,000 tons wheat of crop year 2010 was sold at Rs 1,050 per 40-kg, while wheat from crop 2011-12 was offloaded at Rs 1,100 per 40-kg.
After award of the tender, on February 7, 2013 a Non Governmental Organisation (NGO) went to court against this auction and successfully got the stay order against release of wheat stocks under this auction. Later, a group of buyers, which procured wheat from Passco, also filed a case in the court of Chief Justice Lahore High Court, which allowed lifting of the auctioned wheat. However, again on the directives of the SC, Passco stopped release of wheat stocks.