Humanitarian grounds: Sugar sold to Tajikistan at below market rate

Pakistan to supply 30,000 tons of refined sugar at $528 per ton.

ISLAMABAD:

Pakistan on Wednesday signed a deal for sale of 30,000 tons of refined sugar to Tajikistan at $528.25 per ton, which is below prevailing prices in the international market.

The agreement was inked following negotiations between the two countries for a couple of days. Tajikistan’s Agency on State Material Reserves Chairman Nurmahmad Akhmedov and Commerce Minister Makhdoom Amin Fahim signed the minutes of the Pakistan-Tajikistan negotiations for trade of sugar.

Tajikistan had approached Pakistan with a request to provide 30,000 tons of white refined sugar at cheaper rates on humanitarian grounds. The Economic Coordination Committee (ECC) of the cabinet has already allowed the sale at a price lower than the international market.

After negotiations, both sides agreed the rate of $528.25 per ton, $20 below the price on August 13 in the international commodities market. On August 13, the sugar price in the world market stood at $548.25 per ton, said the commerce ministry.

However, the ECC had taken the decision on sale at $20 per ton below the international market based on a summary that put the commodity price at $617.9 per ton in the global market, according to official documents. The agreed rate is also below the price in the domestic market, which is $535.5 per ton.

This year, the country has surplus sugar and stocks stand at 3.1 million tons, of which 332,057 tons are with the Trading Corporation of Pakistan (TCP). The government hopes that the stocks will be sufficient to meet demand until April 2013.

The Ministry of Commerce pointed out that the price concession had been given in the wake of humanitarian crisis faced by the people of Tajikistan.

The government of Tajikistan, while appreciating the goodwill gesture, requested for early delivery of sugar before the onset of winter season (September 30). Pakistan has promised to supply the commodity within shortest possible time.

Both parties agreed on a draft commercial agreement, except for the provision of inland and domestic transportation from mills to the point of delivery, which will be finalised as soon as the clarification, sought by the Ministry of Commerce from the ECC, is received.

The ministry said sugar will be exported to Tajikistan against 100% secured cash letter of credit that the central Asian state will open through a first-class internationally recognised bank. The delivery will be in three lots of 10,000 tons each.

Published in The Express Tribune, August 16^th, 2012.