Ministry for placing wheat losses in SPV

The Ministry of National Food Security and Research has requested the federal government to park the losses caused by flood-damaged stocks of wheat in a special purpose vehicle (SPV).

The ministry has also sought the government's consent to allow Pakistan Agricultural Storage and Services Corporation (Passco) to auction the damaged wheat stock of 8,197.989 metric tons on "as is where is" basis through open competitive bidding under the Public Procurement Regulatory Authority (PPRA) rules.

The resulting financial losses, it said, be parked in the SPV/federal government entity in line with the Passco wind-up framework ratified by the federal cabinet. An inquiry committee has cleared officials, blamed for alleged negligence, of any misconduct.

According to the ministry, the Passco board, in its 160th meeting, directed the constitution of a committee comprising representatives of the corporation, food security ministry and Zarai Taraqiati Bank Ltd for taking samples and conducting laboratory tests. The committee, set up on December 23, 2025, submitted its report on January 30, 2026, calculating the total damaged wheat at 8,197.989 MT in Hafizabad, Alipur and Dera Allah Yar Zones. It confirmed through laboratory analysis that the wheat was unfit for human consumption.

The food ministry told the Economic Coordination Committee (ECC), in a recent meeting, that the assessed quantity of damaged wheat had an estimated cost of Rs1.049 billion, however, the actual loss would be determined on the basis of revenue generated through sales.

Furthermore, the weight loss due to prolonged submergence at Seetpur centres had been estimated between 20% and 30% and a technical & research committee, followed by a multi-institutional assessment involving the PCSIR, Punjab Food Department and others, confirmed the weight loss ranging from 18% to 30% depending on storage conditions and the type of wheat (imported or local).

The food ministry apprised the meeting that its proposals were premised on the consideration that though the loss of damaged wheat in 2022 was duly recorded in Passco's books of accounts and the resultant financial impact was distributed among shareholders, the loss of damaged wheat in 2025 presented an entirely different set of circumstances warranting a different financial treatment.

It mentioned that the accumulated losses in 2025 had rendered shareholders' equity negative. Since the liability of shareholders was limited to the extent of their paid-up capital, therefore it was legally and financially untenable for them to absorb further losses. Also, in the wake of winding up of Passco, the federal government has established an SPV for parking liabilities of the corporation.

The ministry recalled that the Passco board, in its 157th meeting held on October 3, 2025, directed the submission of a fact-finding inquiry report and the inquiry report dated October 7, 2025 concluded that the damage had resulted from a natural catastrophe with no negligence on the part of the staff. The report recommended urgent auction of the damaged wheat on "as is where is" basis through open tenders.

During discussions in the ECC meeting, the food ministry gave the background and details of its proposals. The forum termed the decision an operational necessity due to the winding up of Passco and to avoid further financial liability.

The ministry assured the ECC of early disposal of the wheat stock and highlighted details of purchase requests made by different agencies. Ministers for commerce and power emphasised the importance of a mechanism for transparent auction and third-party validation of the entire process. It was also pointed out that the "unfit-for-human-consumption" declaration should be based on solid evidence. The ministry explained the laboratory test processes conducted so far and assured the ECC of a third-party validation.