ECC scraps tender for wheat import
The federal government on Thursday scrapped a tender for the import of 150,000 tons of wheat after an unfounded allegation of collusion angered some members of a cabinet body.
Proceedings of the Economic Coordination Committee (ECC) of the cabinet, which met for the second consecutive day, further complicated the import of 1.5 million tons of wheat.
Finance Adviser Dr Abdul Hafeez Shaikh had convened the ECC meeting to resolve the issues hampering wheat import but once again it could not arrive at a consensus.
Pakistan had decided to import 1.5 million tons of wheat in June this year after the government’s permission for export of 5.5 million tons of wheat and its products created shortage in the domestic market.
During the meeting, Additional Food Secretary alleged that there was collusion between importers who quoted bids of around $274 per ton for the import of 150,000 tons of wheat, said government officials who attended the meeting. The price quoted in the previous import tender was $233.8 per ton, they added.
Officials said Finance Secretary Naveed Kamran Baloch took exception to the allegation and asked the additional food secretary and National Food Security Minister Syed Fakhar Imam to provide evidence for substantiating the claim.
The Trading Corporation of Pakistan (TCP) had brought the issue before the ECC for its approval of the tender, which was an operational matter and did not require the ECC’s endorsement, according to the officials. Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh then decided to scrap the tender due to the allegation levelled by the food ministry official.
The Express Tribune contacted Afgan for his version but he did not reply.
The ECC had already approved a summary in June and again on July 15 for the import of 1.5 million tons of wheat. On August 4, the federal cabinet endorsed the ECC’s decision to allow the TCP to import 1.5 million tons of wheat on behalf of Pakistan Agriculture Storage and Services Corporation (Passco), Punjab and Khyber-Pakhtunkhwa by waiving all federal duties and taxes.
Provincial governments were contacted for seeking their endorsement of demand, which included 500,000 tons for Passco, 700,000 tons for Punjab and 300,000 tons for Khyber-Pakhtunkhwa. But Punjab refused to pick subsidy cost of Rs10.5 billion.
On Thursday, the Punjab government’s representative once again did not commit to picking the import cost, according to the officials. He instead said the matter should be taken up with the Punjab chief secretary.
The estimated import price for 700,000 tons of wheat for Punjab is Rs35 billion but the provincial government wants to pay only Rs24.5 billion based on the support price of Rs1,400 per 40 kg. The international market price is around Rs2,000 per 40 kg. Punjab was of the view that it produced three-fourths of the total wheat production, which was sufficient to feed its population. However, due to depleting stocks, mainly because of mishandling and exports, Punjab fears it will run out of stocks by January without imports.
However, it was not ready to foot the Rs10.5 billion subsidy bill for import while the finance ministry was of the view that as per the decision taken by the prime minister every provincial government would bear its cost of import.
Sources said the matter would again be reported to Prime Minister Imran Khan for his decision.
An official statement the finance ministry issued after the meeting stated that the ECC discussed in detail the need for wheat import through the government and private sector.
The chairman directed that wheat availability was an important issue and there was a need to maintain sufficient stock of the commodity, which could be made available at a reasonable price, it added.
“It was decided that TCP will start importing wheat in the required quantities through small tenders from time to time in order to maintain wheat supply at a reasonable price and for keeping additional strategic reserves,” said the finance ministry. Sources stated that chances were that the government may end up importing only 900,000 tons of wheat due to differences among stakeholders and rising prices.
The ECC was informed that the best time for wheat import was between June and August due to reasonably stable prices in the international market and Pakistan had already missed the opportunity.
Owing to the increasing shortage and fewer supplies, prices of wheat and wheat flour have been constantly increasing. Wheat prices, which were at Rs1,500 per 40 kg in the market two years ago, have now increased to Rs2,000, a hike of 33.3%.
Similarly, the wheat flour price, which was at Rs900 per 20 kg in August 2018, has increased to Rs1,400, a surge of Rs500 or 55.5% within two years.
Published in The Express Tribune, September 18th, 2020.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.