Trade with Iran: Govt to barter wheat for seeds and fertilisers

Pakistan will export 1m tons of wheat in return for agri seeds, equipment and fertiliser.

ISLAMABAD:

Pakistan has decided to export one million tons of surplus wheat to Iran in return for agricultural seeds, equipment and fertilisers and will send a delegation to Tehran to determine prices of commodities to be traded under a barter system.

The decision to this effect was taken here on Saturday in a meeting of the cabinet committee on surplus wheat, headed by Water and Power Minister Syed Naveed Qamar. The Economic Coordination Committee (ECC) of the cabinet had constituted this special panel to review options for export of wheat to Iran under the barter system.

Iran’s international trade has greatly been affected by widespread sanctions imposed by the United States and Europe for Tehran’s nuclear programme. However, the US has recently stated that it will not oppose any move for barter trade with Iran.

An official of the water and power ministry said the committee decided to seek agricultural equipment, fertilisers and seeds from Iran in return for wheat. To finalise modalities including prices, a delegation having representation from the finance, food security and commerce ministries, economic affairs division and Pakistan Agriculture Storage and Services Corporation (Passco) will soon visit Tehran.

Passco Managing Director said samples and specifications of the commodity had already been sent to Iran. Qamar asked the authorities concerned to finalise arrangements with Iran before arrival of next crop which was around the corner.

Last year, Pakistan produced 25.2 million tons of wheat, higher than the demand for 23 million tons. This year, the Planning Commission expects output to be around 24 million tons while according to the provincial crop reporting system the production may cross 27.3 million tons.

In the last ECC meeting, the Ministry of National Food Security and Research had submitted a summary on sale of surplus one million tons of wheat to domestic millers. The ECC decided to explore further arrangements for barter trade with Iran. It has already allowed release of 450,000 tons of wheat in the domestic market.

Iran-Pak pipeline financing

The government has asked the petroleum ministry to come up with firm proposals on financing the Iran-Pakistan gas pipeline project.

The directive was given in a meeting of the cabinet committee on Iran-Pakistan gas pipeline project, headed by Water and Power Minister Naveed Qamar.

It observed that the options earlier tabled in the ECC by the petroleum ministry were “fluid” and required a detailed working including consultations with Iran, China and Russia which had been dubbed as potential financiers of the $1.5 billion project.

The committee asked the petroleum ministry to furnish a detailed report on these options in the next meeting. Iran had offered to provide $250 million for the pipeline, which made up only 16.6 per cent of the required financing.

Earlier, the petroleum ministry had given three options to the ECC for arranging funds after a Chinese bank backed off from financing the project.

Among the three options, the government can arrange funds through the Gas Development Cess, which has already been imposed. In Saturday’s meeting, the committee asked the petroleum ministry to come up with progressive calculation of the cess so that timely decisions could be taken about procurement and tendering of sub-contracts.

In the second option, the ministry sought the go-ahead to cancel the contract with the International and Commercial Bank of China (ICBC) and award it to the second lowest bidder. The second lowest bidder was a consortium of United Bank, Burj Capital, ECO Trade and Development Bank, Field Stone Group and Islamic Corporation for Development of Private Sector.

In the third option, the ministry proposed approaching Chinese, Russian and Iranian governments for signing government-to-government contracts for construction of the pipeline from the Iranian border to Nawabshah.

Published in The Express Tribune, March 18^th, 2012.