Following the Ministry of Finance”s directive, a consortium of six banks has enhanced TCP”s credit limit by Rs 20 billion to Rs 135 billion to ease import of urea. Sources told Business Recorderon Thursday that the state-run grain trader was seeking an immediate financing of some Rs 25 billion from federal government to open letter of credit (LCs) for import of urea, as its credit limits was almost exhausted owing to rising commodity operation.
Recently, following the directives of the ECC, TCP awarded contracts for import of 0.3 million tons of urea to avoid any shortage in the domestic market in Rabi season. The corporation doesn”t have sufficient funds for import of the commodity and required huge funds for opening of LCs. The TCP requested the ministry of finance for an immediate financing of Rs 25 billion through fresh funds or increase in its credit limit for smooth urea import operation. “Last week, the state-run grain trader asked the ministry of finance for an increase in credit limit up to Rs 140 billion from Rs 115 billion to establish LCs for import of urea,” they said.
On the demand of TCP, the consortium of six banks, which regularly provides financing to TCP, has been asked by the ministry to enhance the corporation”s credit limit by Rs 20 billion with immediate effect. After the directive and government guarantee, the consortium has enhanced TCP”s credit limit up to Rs 135 billion and now the state-run grain trader can get more financing for smooth commodity operation.
Sources said the ministry of finance has also allowed TCP to establish LCs for import of 0.3 million tons in favour of three parties, which have been awarded contract letter for supply of urea at $399.38 per ton. The increase in credit limit will also enable TCP to make timely payment to sugar mills as recently the corporation had procured 210,000 tons of sugar from domestic mills and payment to some was still pending, they added.
LCs for the import of urea will be established during this week as the credit limit has been revised by banks and urea is expected to reach here by month-end. “This is not confirmed whether the credit limit has been enhanced on a temporary basis or permanent but, it”s confirmed that the limit has been increased to Rs 135 billion, which is sufficient enough for urea import and sugar procurement operation,” said an official of TCP.
Although, lower international prices have supported TCP to procure urea at ever lowest price of this calendar year, however, still this needs billions of rupees for import process, he added. He said the TCP”s billions of rupees payments are pending with Utility Stores Corporation, ministry of finance and National Fertiliser Marketing Limited. If these receivables matured then there is no need for raise in the credit limit. A consortium of six banks is providing financing to TCP on a regular basis, as the government lacks funds to conduct commodity operation from its own resources. National Bank of Pakistan, United Bank Limited, Allied Bank Limited, MCB Bank, Habib Bank Limited and Standard Chartered Bank are the part of this consortium.