Punjab food dept wants Rs33m subsidy to cover rice losses

LAHORE: The Punjab food department has requested the chief minister to provide Rs33 million in subsidies after red tape and bureaucracy led to mishandling of procured paddy during 2009.

According to sources, the secretary of the food department is trying to cover up for his department, which was responsible for the rice not being sold at the time when its price was comparable to the price at which it was purchased.

“The department failed to sell the whole purchased quantity owing to some hidden motives of some officials involved, despite it being perfectly capable of selling the rice,” said an official of the Food Department who wished to remain anonymous.

The Punjab food department kept on trying to get another government organisation, Passco, to take over the procurement and selling. A lot of time was wasted and the storage and markup costs of the loans added up. During this time, the price of rice also declined from Rs1,285 to Rs1,025 per 40 kg.

According to government procedure, it is the secretary’s responsibility to point out those responsible for negligence in the sale of total quantity of paddy and take action against them.

This has not been done. Instead the secretary, Muhammad Irfan Elahi, is maintaining that rice needs to be sold at the lower price of Rs1,024 per 40 kg to save the government from huge financial losses as the rice could spoil if stored for too long.

The department has proposed to the chief minister that the remaining stock may be sold through an open auction at the lower price with the government facing losses of Rs33 million in the process of repayment of loans and incidental costs and due to lower price of rice.

The Punjab food department purchased 11,164 tons of paddy for Sheikhupura and Gujranwala districts for Rs343.607 million at Rs1,231 per 40 kg. The funds were obtained by the department from banks at 15.35 per cent interest rate which were scheduled to be repaid till January 2010.

Punjab’s government wanted to purchase rice from the growers in order to facilitate them when the province was ordered by the government to do so.

“Passco was ready to take the procured stock from the food department after procurement completed but the department was reluctant to let Passco do so,” said Passco’s general manager operations Chaudhry Khalid Sharif Warriach.

He said it was because the price of paddy had increased in the open market. Warraich explained that later Passco did not have any funds when the Food department wanted them to take over the rice procurement and sell. He added that no commitment had been made by the department.

“Passco was repeatedly requested to take over the purchased stocks for payment, the food department offered the commodity for sale on the open market after they refused,” said Secretary Food Punjab Muhammad, Irfan Elahi.

He said that the food department was not responsible for this financial loss and that the chief minister had been informed about the facts.

In January, the food department in a summary to Chief Minister Mian Shahbaz Sharif maintained that general manager Passco had informed that the corporation was not in a position to take over the commodity and to make any payment to the provincial government on account of paddy.

The food department further added that Passco said that it bears no responsibility and would accept no liability whatsoever for any expenses and incidental expenditures on paddy.

Published in  the Express Tribune, June 17^th, 2010.