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Sugar procurement during CY13: TCP pays over Rs 26 billion to mills




  • Trading Corporation of Pakistan (TCP) paid over Rs 26 billion to domestic sugar mills against the procurement of 0.5 million tons of sugar during CY13. Sources told Business Recorder on Tuesday that in order to build strategic reserves and ease the financial issues faced by sugar mills the state-run grain trader procured a huge quantity of sugar from some 65 domestic sugar mills during last year. 

    Bumper cane crop and slow sales in the domestic market created some financial complication for the domestic sugar mills, with the result they were unable to make billions of rupees payments to sugarcane growers as well as banks. In order to offload sugar stocks and ease financial difficulties, Pakistan Sugar Mills Association (PSMA) requested the federal government to procure sugar from local mills. 

    On the request of PSMA, the Economic Co-ordination Committee of the Cabinet (ECC) in December 2012 decided to procure sugar from domestic mills through state-run grain trader. Cumulatively, TCP procured some 0.52 million tons of sugar from domestic mills and paid an amount of Rs 26.44 billion in CY13. 

    Sources said these payments have been made after taking physical charge of procured sugar, which is still lying in sugar mills’ godowns and being supplied directly to Utility Stores Corporation. Pakistan Standard Quality Control Authority (PSQCA) and Pakistan Council of Scientific and Industrial Research (PCSIR) testing reports, staff surveyor report, stock inspection report and handing over, taking over certificate duly signed by surveyor, Muqadam and sugar mill’s representative were necessary for payments. All the mills have fulfilled these requirements, they added. 

    TCP has also taken strict action against those mills, which were failed to comply with contract award letter. The state-run grain trader withheld procurement payment of four mills as they were using delaying tactics to release the already procured stocks. The accused mills failed to supply some 19,195 tons of sugar to USC despite a delivery order issued by TCP, sources said. 

    Overall, TCP floated some seven tenders for the procurement of sugar during the last calendar year. Some 32,7518 tons of sugar was procured in January 2013 at Rs 52,800 per ton and hence Rs 17.293 billion were paid to sugar mills. In July 2013, TCP purchased 46,268 tons of sugar at Rs 48,150 per ton and disbursed Rs 2.227 billion to mills. TCP paid Rs 1.646 billion against the procurement of 34,529 tons of sugar in August 2013. 

    Some Rs 5.2 billion were disbursed in October 2013 against the procurement of 100,000 tons of sugar, while two tenders were conducted in November and December, however TCP failed to procure the targeted quantity as mills had refused to match lowest price. TCP procured some 18,000 tons of sugar against the target of 150,000 tons and disbursed some Rs 800 million. The remaining procurement under these tenders was made during this year. Sources said TCP required some 50,000 tons stock every month to supply USC and other government departments -Army Welfare and CSD, etc. 

    Copyright Business Recorder, 2014

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