Sugar tender: TCP likely to face inquiry

Trading Corporation of Pakistan (TCP), a subsidiary of Commerce Ministry, is reportedly facing charges of collusive tendering in sugar procurement and it is feared that about one billion rupees will be stuck with millers, well informed sources in the TCP told Business Recorder. The Economic Co-ordination Committee (ECC) of the Cabinet, recently allowed procurement of 100,000 tons (50,000 + 50,000) of sugar from mills through TCP. 

Commerce Ministry, which has recently completed an inquiry into TDAP financial scam of Rs 1.27 billion, is expected to initiate inquiry into the doubtful tendering of sugar as the national exchequer inflicted billions of rupees loss a few years ago. The mills that failed to perform had been blacklisted but later on due to political influence these were allowed to participate in tendering process. 

The sources said new Chairman TCP, Rizwan Ahmad, is well aware of a recent sugar procurement tender wherein four parties had given the lowest similar rate of Rs 47,690 per ton to get an outright allocation of 5000 tons each, which is said to be a clear case of collusive tendering in violation of Section 4(2)(e) of Competition Act 2010. 

The sources said that bidders who quote unrealistic prices without accounting for the financial carrying cost actually manipulate stocks in connivance with TCP and do not physically deliver sugar to TCP and keep the delivery orders on hold to use the payments released by TCP as interest-free working capital to the detriment of government of Pakistan. TCP did not take any coercive action against the defaulting mills in past that is why there are new entrants to take advantage of the situation by quoting unrealistic rates which apparently seem to be in line with the market but in actual fact the purpose and motive is different. 

The sources said, there are about twelve mills which are habitual defaulters and if for example they get the tender awarded now they would only part deliver during the season and would try to linger as much as possible for delivery of the remaining sugar to utilise the state funds which is not possible without the blessing of TCP officials. 

The surveyors also give bogus reports on the basis of which the payment is processed. The practice could be curbed if TCP had initiated proceedings through FIA and NAB to catch the influential millers who until now have engaged TCP in a legal rigmarole and enjoy interest free utilisation of funds. The balance sheet of 2012 of one such mill has provisioned this payment as ”advance from customers” and other long term payables as the amount represents advance received from customers against sale of sugar from 2013-14 production,” an official in Commerce Ministry told Business Recorder on condition of anonymity. 

According to sources, by increasing long term portion of loan the balance sheet has become more bankable to raise further financing. They have smartly not made any provision for default surcharge/penalties on account of their failure to deliver sugar to TCP. Officials in Commerce Ministry argue that an immediate probe in these malpractices and physical verification of stocks of the bidders is the prime responsibility of TCP so that influential millers do not take advantage of the situation. Meantime, they proposed that the tender should be scrapped as four parties have taken advantage of 20,000 tons allocation outright in clear violation of Competition Act 2010. Chairman TCP, Rizwan Ahmad could not be reached for his comments. 

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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