Some economic managers have suggested that the Economic Coordination Committee (ECC) should be kept away from making decisions on contracts for procurement of food commodities and private sector should be allowed to engage in such imports.
They emphasised that food procurement contracts did not fall within the purview of the ECC and the procuring agency should decide on purchase deals for the edible commodities.
Those concerns were raised during a recent meeting of the ECC that reviewed the award of a wheat import contract. The ECC – a cabinet body – directed the Ministry of National Food Security and Research to draw up a viable plan for the regulation of food commodity imports while keeping in view the financial constraints faced by the government and the circular debt level in the commodity supply chain.
During discussion, Special Assistant to the Prime Minister on Government Effectiveness Dr Muhammad Jehanzeb Khan observed that the ECC was dealing with policy matters.
“It allows import of food commodities according to the need. However, after its approval, the onus is on the procuring agency to purchase the edible goods in light of the procurement rules,” he said.
Some ECC members argued that the import of wheat, sugar and urea caused a huge financial impact on the national exchequer, therefore, those commodities may be imported by involving the private sector. Finance Minister Ishaq Dar, also the ECC chairman, noted that for maintaining price stability for the essential food items, the federal government’s intervention was necessary.
On its part, the Cabinet Division voiced concern over bypassing the opinion of some of the ministries while submitting a summary to the ECC. It pointed out that the views of stakeholders such as the Ministry of Finance, Ministry of Commerce, Ministry of Maritime Affairs and government of Balochistan were not obtained and incorporated into the relevant summary.
The Ministry of National Food Security told the ECC that the Trading Corporation of Pakistan (TCP) had sought advice on an international wheat tender, which was opened on November 30, 2022, for the import of 500,000 tons.
The cost of wheat import through Gwadar Port was included in tender documents according to an advice of the Prime Minister’s Office.
TCP issued the seventh international tender on November 18, 2022 on a cost and freight (CFR) basis for shipment between December 16, 2022 and February 8, 2023 at Karachi ports and/or Gwadar Port.
Ten international bidders participated, of which nine quoted rates for wheat import while one submitted a regret letter. The lowest bids were offered by Cereal Crop Trading LLC at $372 per ton for the supply of 130,000 tons of wheat at Karachi ports and by Grainflower at $377 per ton for the supply of 105,000 tons at Gwadar Port. The bids were valid till December 5, 2022.
The estimated cost of imported wheat, as calculated by TCP, came in at Rs91,121 per ton or Rs3,645 per 40 kg at Karachi ports, whereas the cost was estimated at Rs91,623 per ton or Rs3,685 per 40 kg for Gwadar Port.
As provided under the Public Procurement Regulatory Authority (PPRA) rules and in order to import the tendered quantity, TCP finalised a bid matching process.
Offers of Cereal Crop Trading for 130,000 tons, Agrocorp International for 120,000 tons and Aston HI DMMC for 190,000 tons were received compared to the tender for 500,000 tons.
The national food security ministry revealed that TCP had also received a revised offer from Prodintorg, Russia that quoted a price of $372 per ton under a government-to-government contract for supply of 450,000 tons on a CFR bulk basis at Gwadar or Karachi ports from February 1 to March 31, 2023. The offer was valid till December 5, 2022. It was highlighted that against the total import of 2.6 million tons of wheat allowed by the cabinet, 980,152 tons had already arrived, whereas TCP had awarded tenders for 685,000 tons.
Now, with the tender for 500,000 tons and the offer of 450,000 tons under a G2G arrangement, the entire quantity of 2.6 million tons will be imported.
Published in The Express Tribune, December 9th, 2022.
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