Govt allows costly wheat import

Scraps sugar import tender, approves scaled-back Kamyab Pakistan Programme

ISLAMABAD:

The government on Thursday allowed importing wheat at $383.50 per metric ton or Rs65 per kilogram – the highest price ever paid by the country – but scrapped a sugar import tender due to the same reason.

The Economic Coordination Committee (ECC) of the cabinet, which took these decisions, also cleared the scaled-back Kamyab Pakistan Programme amid few committee members’ concerns over missing some critical details from the summary.

Against the original plan of Rs815 billion programme for two years, the finance ministry presented Rs228 billion programme for fiscal year 2021-22 and 2022-23 –the last two years of the Pakistan Tehreek-e-Insaf (PTI) government. The subsidies were shown at Rs37 billion to give loans to just one million borrowers.

Wheat import

“The ECC accorded approval for the lowest bid received for award of fourth international wheat tender for the FY 2021-22 to import 120,000 MT of wheat,” the Ministry of Finance stated after the ECC meeting.

A senior government official told The Express Tribune that the lowest bid was $383.50 per metric ton or Rs65 per kg at today’s exchange rate. The last tender had been signed at $356 per ton or Rs61 per kg. The 40kg import price will be roughly Rs2,600, which is far higher than the release price of Rs1,950 that Prime Minister Imran Khan approved for issuing wheat to flour mills.

The federal government has decided to import four million metric tons of wheat to meet domestic shortfall and build some strategic reserves. However, so far, all four tenders have remained under subscribed and prices ranged from $244 of first tender to roughly $384 per metric ton of the latest tender.

The special assistant to the prime minister on national food security claimed on Wednesday that except the poorest people everyone else would get wheat flour at Rs55 per kg. But at Rs65 wheat price, the government will have to give huge subsidies.

Sugar import

The ECC approved scrapping a 50,000 metric tons sugar import tender after a Geneva-based bidder gave $670 per metric ton price, which was the highest price or could have cost per kg at Rs113. The government had approved the last tender for 200,000 metric tons of sugar import at around $637 per metric tons that translated into Rs106 per kilogram.

Read More: ECC may give nod to 40,000 tons wheat purchase

Instead, the ECC directed that to issue fresh three separate tenders of 50,000 metric tons each so that there is more participation and increased competition when international prices fall down.

An official of the Ministry of Industries said that sufficient sugar stocks of 715,000 metric tons were available in the country. In addition to that, 200,000 metric imported sugar was being loaded in ships that will reach Pakistan soon.

The federal government had decided to import 600,000 metric tons of sugar, out of which approval for 300,000 metric tons import has already been given.

The ECC emphasised to ensure a smooth supply of sugar throughout the country and directed to initiate crushing by sugar mills in the beginning of November, 2021 as done last year, said the finance ministry.

Kamyab Pakistan Programme

The Finance Division presented an updated summary regarding Kamyab Pakistan Program (KPP) before ECC on Thursday, according to the press release.

A senior finance ministry official said that the government has now reduced the plan to just Rs90 billion loans to be disbursed among 301,500 borrowers in this fiscal year and another Rs138 billion in next fiscal year among over 738,000 borrowers. The subsidies in the first year were Rs5.6 billion and Rs31.4 billion in the second year, he added.

A participant of the meeting said that the finance ministry did not have the data about the numbers of districts that it had finally picked for targeting, therefore, the amount of subsidies, loans and beneficiaries were tentative and will be firmed up further.

Finance Minister Shaukat Tarin had vowed to launch the largest-ever program in the history of Pakistan to disburse interest-free to cheapest loans among 30 million people in three years. However, his ambitions were watered down by the International Monetary Fund (IMF) and the bureaucracy of the finance ministry.

The finance ministry handout stated that the “programme has been streamlined in consultation with stakeholders to disburse microcredit for uplifting marginalised segments of the society.”

Under the first three components, micro-loans shall be disbursed amongst eligible persons registered with Ehsaas Data through National Socio-Economic Registry (NSER) who have family income of up to Rs50,000 per month.

Published in The Express Tribune, September 24^th, 2021.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.