A glut in sugarcane supply translated into slow sales and low sugar prices in the domestic market, resulting in financial complication for domestic sugar mills. Sources said that the situation rendered millers unable to pay billions of rupees sugarcane growers or repay their bank loans. Pakistan Sugar Mills Association (PSMA), in a bid to offload their surplus sugar stocks, had requested the federal government to intervene and procure sugar from local mills.
Entertaining PSMA”s request, the Economic Co-ordination Committee of the cabinet (ECC) had decided in December last year to procure sugar from domestic mills via the state-run grain trader. Subsequently, the TCP had issued a tender notice for procuring 330,000 tons of sugar.
In response to TCP”s tender, which was opened on January 14 this year, the state-run grain trader received 71 responsive bids for 660,000 tons. Bidders, it is learnt, quoted rates ranging between Rs 52,800 per metric ton and Rs 59, 250 a ton for varying quantities.
Initially, the TCP awarded the tender to two of the lowest bidding parties – Kamaliya Sugar Mills and Huda Sugar Mills – offering to buy 10,000 tons each at a price of Rs 52,800 per metric ton. Meanwhile, other bidders, who had quoted higher rates, had been asked to match the lowest bid price. As many as 70 bidders accepted the TCP offer and agreed to supply sugar at Rs 52,800 per metric ton.
When the offered quantity exceeded the TCP”s tender quantity, it decided to procure sugar on a pro-rata basis to accommodate all mills which had participated in the tender. Most of mills, which submitted bids for at least 10,000 tons of sugar, were allocated 4,920 tons each, while the remaining mills, which offered to sell 5,000 tons were awarded a letter for a 2,460 tons.
After awarding tender, TCP started analysing samples offered by mills. Sugar offered by most bidders was in accordance with the terms and conditions set by the state-run grain trader for sugar procurement. Pakistan Standard Quality Control Authority (PSQCA) and Pakistan Council of Scientific and Industrial Research (PCSIR) finalised testing, survey and stock inspection reports, besides making other relevant arrangements necessary for the payment of dues, a TCP official said.
He said that TCP started making payments to the mills in the second week of February and completed the sugar procurement operation in the third week of March, clearing all dues. “Cumulatively, Rs 17.292 billion has been paid to domestic sugar mills against the procurement of 327,500 tons of the commodity”, he added.
After TCP took over the physical charge of 327,500 tons of sugar, the state-run grain trader”s sugar stocks surged to nearly 400,000 tons, he said, adding that the procured sugar would later be supplied to the Utility Store Corporation (USC) and provincial food departments to meet their demands.