Sugar tender cancelled

KARACHI: A tender for the import of 50,000 tons of sugar has been cancelled by the Trading Corporation of Pakistan (TCP). Pending the issue of a press release from the TCP, official sources confirmed to The Express Tribune that the import order had been cancelled.

The tender had been awarded to Dubai-based Sadat Business Group Limited through a closed bid auction on May 24. The company had quoted a price of $598 per ton of sugar and was the lowest bidder in the auction. Under the agreement, Sadat Group had to deliver the sugar at the Karachi Port within three weeks of the opening of a letter of credit.

However, the company was unable to honour this obligation and requested an extension in the delivery date from July 18 to July 30. Upon the request, the company was allowed an extension in its contractual deadline till July 30, on the condition that sugar would be procured by the company by July 22.

However, even after the expiration of the extended deadline, the company remained unable to secure the required sugar from its supply point in Brazil. Thereupon the order was cancelled by the executive committee of the TCP.

TCP has also confiscated $586,000 submitted by the company as bank guarantee at the time it was awarded the contract. TCP has also blacklisted Sadat Business Group and will exclude the company from future auctions, sources said.

Recently, another import tender issued in favour of Chinese firm, Yunnan Coal Chemical Industry Group Limited, for 100,000 tons of sugar was cancelled on similar grounds on July 18. The bank guarantee worth $976,000 for that tender was confiscated by TCP when the order was cancelled.

Sugar stocks in the country are estimated to stand around 1.3 million tons including stocks held by sugar mills, TCP and Utility Stores Corporation. Sugar millers contend that they have already supplied at least 80 per cent of their annual stocks to the market.

The cancellation of successive import tenders can cause shortage of sugar at utility stores. Retail prices of sugar were recently increased by one rupee by the Pakistan Sugar Mills Association to Rs65 per kg. With Ramazan approaching, retailers say that another increase in prices of sugar cannot be ruled out.

Published in The Express Tribune, August 1^st, 2010.