The Pakistan Agriculture Storage and Services Corporation (Passco) is facing a severe resource crunch in its food security operations because the Gilgit-Baltistan (G-B) government is yet to pay the corporation Rs13 billion in dues since 2007, The Express Tribune has learnt.
If the outstanding liabilities are not paid urgently by G-B, the corporation is likely to face bankruptcy during the next wheat procurement season – so far, it has been procuring food items on loans from commercial banks at market interest rates, said an official familiar with the matter.
If repaid this year, the corporation will be paying the banks an additional Rs3 billion in interest.
The functions of Passco, established in 1973, are procurement of wheat and other agricultural commodities if required. They also implement the support price for wheat, paddy, gram, potatoes, onions and any other specified agricultural commodity. Passco also manages the storage of wheat and its release to deficit provinces/regions as well as the armed forces throughout the year.
In 2011, the corporation provided 132,000 metric tonnes (MT) of wheat to G-B and till August this year, 72,900 MT had been provided on the support price plus incidental charges (charges to meet Passco’s daily expenses). Although the G-B government has not paid dues since 2007, Passco did not discontinue the supply of wheat to the region because it was directed by the ministry of national food security and research to do so.
According to the official, the corporation is bound to provide procured wheat to buyers on a no-profit, no loss basis. At present, the corporation has calculated a price of Rs6,000 per ten bags (each weighing 100 kilogrammes) in order to meet their incidental costs, including salaries and storage arrangements.
Another senior Passco official said dozen of references had been sent to the G-B government as well as the federal government for settlement of payments, but no money to Passco so far. The federal government also owes Passco money in the form of a subsidy.
In August, the corporation stopped the provision of wheat to G-B with a warning to pay their dues. At the time, the food minister assured Passco of a provision of Rs1 billion in order to restart wheat provision to G-B, but this amount is yet to be received, the official added.
Passco field general manager Col (retd) Tanveer Hussain said it was the duty of the federal government to ensure that the country’s food needs were met. Commercial banks provided loans to Passco on guarantees provided by the national food security and research ministry. He argued that the ministry, not Passco, was bound to pay the liabilities and added that the corporation had repeatedly informed the ministry about these outstanding dues.
Hussain maintained that Passco discontinued wheat supplies to G-B three times during this year but resumed supplies on the ministry’s assurance.
Ali Imran, a member of the staff for National Food Security and Research Minister Mir Israrullah Khan Zehri, said Zehri had no knowledge of the issue. Imran declined to comment on the issue, despite repeated requests. Wazir Ashfaq Ahmed Khan, the G-B food secretary, also refused to comment.
Published in The Express Tribune, September 26th, 2012.
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