MULTAN, Nov 15: The Trading Corporation of Pakistan (TCP) has accepted bids for the import of urea at higher rates despite having been offered much lower rates by some of the contending bidders.

Moreover, the tenders were called for the import of 75,000 tons of urea but surprisingly the Purchase and Price Evaluation Committee (PPEC) of the corporation has granted import of 300,000 tons of the fertilizer.

As many as 14 importers had submitted bids, which were, opened on November 8. The prices quoted by them were ranged from $234 to $289 per ton. Sources in the TCP said that however the PPEC brushed aside the lowest bids on some ‘hypothetical’ grounds and instead accepted the bids that were on the higher side.

The bids that were discarded had offered the price of $234, $238, $247 and $249 per ton. One of the bidders that had quoted the price of $271.7 was reportedly convinced to ‘rationalize’ the offer to $270.5 per ton.

Four of the bidders who had quoted even higher rates were made to bring down their prices to $270.5 per ton. Consequently, the five firms were collectively awarded the contracts to import 300,000 tons of urea. The firm-wise quantity in tons of urea allowed to import is said to be as: International Trading House (120,000); Shoa Pvt Ltd. (35,000); United Spectrum (35,000); Pacific Chartering & Trading Pvt. Ltd. (80,000); and Dadacom International (30,000).

Awarding contracts for the import of 300,000 tons of urea, the PPEC has offered excuse that the Economic Coordination Committee of the federal cabinet has assessed the fresh requirement of urea at 200,000 tons while a deficit of 100,000 tons is expected out of the already contracted quantity for the Rabi season 2005-06.

However, the sources in the TCP said that while awarding contracts for an amount four times more than the quantity tendered, the PPEC had ignored the fact that the method to import 200,000 tons of urea categorized as fresh requirement had yet to be evolved.

After successful import of wheat in the private sector on rates much lower than that of the TCP, it was proposed that the task of the import of fertilizers should also be given to the private sector. At this, a committee was formed with not other than the Deputy Chairman Planning Commission, Akram Sheikh, as its head to review pros and cons of the proposal.

Simultaneously, the TCP also sought suggestions and proposals from the intending importers and other stakeholders to give their input on the subject of permitting the private sector to import urea. Sources said that although around a dozen companies had submitted their proposals on the subject but the relevant authorities had not so far forwarded the same to the committee formed to evaluate them.

It may be added here that the wheat import prices have come down substantially since the task has been handed over to the private sector from the TCP. The corporation was used to import the commodity at prices fluctuated around $200 per ton while since the business has come in the private sector the prices have lowered down to $150 per ton or even lower.

Analysts are forecasting that the same trend will be reflected when the import of fertilizers especially of urea will come to the private sector. Rejecting the lower prices offered for the November 8 tenders, the PPEC took excuse that the firms had not applied for pre-qualification.

But representatives of these firms said that there was no mention of the condition of pre-qualification in the terms and condition of the tender invited for the purpose through advertisements in the print media. Moreover, they questioned if that was the case then why did the TCP get millions of rupees as earnest money/security deposit from them along with their bids?

It may be pertinent to mention here that previously the TCP had awarded contracts of urea import at the rates ranging from $296 to $312 per ton.

TCP VERSION: Explaining the logic for not entertaining the lowest bids, a senior TCP official, who did not want to be named, said that the PPEC kept in mind the international market prices of urea while awarding contracts at $270.5 per ton. “This is the same price at which other countries of the region like India and Iran are importing urea this year,” he added.

He said the corporation’s previous experience with the bidders who quoted prices less than that of the prevailing international prices was not good. He said it happened at a number of occasions that they could not deliver and consequently the commodity could not be supplied in the market as per the anticipated domestic demand.

The official said that the PPEC also took care of the aspect while awarding the contracts that the successful bidders should have a profile as the international players in the urea business.

On the issue of awarding contracts for 300,000 tons as against the tendered quantity of 75,000 tons, the official said though the bids were invited for 75,000 tons through newspaper advertisements on October 26, but later the ECC conveyed that 200,000 tons of urea would further be required for the Rabi season 2005-06.

He said the shipment of urea required at least 30 days after issuance of the contract. The PPEC thought that invitation of bids for the import of more urea would take time and in the meanwhile the prices of the commodity in the international market were likely to be increased further. Hence, it was decided that the contracts for all the required quantity be granted simultaneously.

He said none of the lowest bids was rejected on the basis that the firm was not pre-qualified because the ‘pre-qualification’ was not the condition for the tenders in question.