Sugar export to Tajikistan: TCP for not levying transportation charges

Trading Corporation of Pakistan (TCP) has proposed that Pakistan should not charge inland/domestic transportation cost of 30,000 tons sugar (approximately $1.2 million) from Tajikistan, in addition to already promised discount of $20 per ton as compared to international price, official sources told Business Recorder. 

The sources said, upon a summary moved by the Industries Division, the ECC, in its decision of August 7, 2012, allowed export of 30,000 tons of sugar to Tajikistan on government to government (G2G) basis from TCP reserves at a price differential of $20 per ton below the international market price. The ECC also decided that transportation cost will be borne by Tajik government. 

Consequent upon the ECC decision a delegation from Tajikistan headed by Nurmahamad Akhmedov, Chairman (Minister) Agency on state material reserves visited Pakistan from August 12-15, 2012, to finalise the agreements for export of sugar and some other raw materials. The Ministry of Commerce arranged parleys between the two sides on 13th and 14th August 2012. From Pakistan side senior Minister for Commerce led the delegation. 

During the bilateral discussions, issue of cost of inland/domestic transportation from the respective mills to the point of delivery (Amangarh, District Nowshera, KP) also came up. The Tajik side requested the Government of Pakistan to take up the cost of inland transportation while contending that international prices are generally quoted quarterly on “Free on Board” (FoB) or Cost and Freight (C&F) basis. However, the Ministry of Commerce was not in a position to commit anything on this account as decision of the ECC requiring “transportation cost to be borne by the government of Tajikistan,” does not clearly exclude the cost of inland transportation. 

According to sources, Ministry of Commerce is of the view that according to international trade practices, prices are either quoted on C&F basis or FoB basis; the latter from the point of departure of the exporting country ie seaport or international border. As such the contention taken by the Tajik side does merit consideration. 

TCP argued that inland/domestic transportation cost will range between $30-40 per ton (total $0.9 to 1.2 million). In case this is to be paid by the Tajik government it will offset the $20 per ton discount offered by the GoP, rather it would escalate the price of sugar beyond international prices and this undermines the goodwill gesture conveyed by the Government of Pakistan to the Government of Tajikistan which had been made in this case. News regarding this decision by Pakistan have already been splashed in the Tajik print and electronic media. 

As regard the position of reserves available with TCP, the quantum of releases scheduled till August 31, 2012 is 358,269 tons; the balance reserve as on September 1, 2012 would be 309,031 tons which is adequate for releases required to be made up to January/February, 2013 ie well beyond start of the next sugar season October/November 2012. Therefore, the demand of Government of Tajikistan for purchase of 30,000 tons of sugar can be conveniently met. 

“We have submitted the matter for approval of the Economic Co-ordination Committee (ECC) of the Cabinet for allowing TCP to conclude agreement for sale of 30,000 tons of sugar, with Agency on State Material Reserves, Republic of Tajikistan at 20 $ less than the international market price on the day of negotiation ie August 13, 2012 on FOB basis with the point of delivery Amangarh, District Nowshera, KP. 

Copyright Business Recorder, 2012

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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