ECC orders wheat import in small quantities

Updated 18 Sep 2020

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he sense of the meeting was that Pakistan may not import more than 900,000 tonnes of wheat against the earlier decision to import 1.5 million tonnes.  — Reuters/File
he sense of the meeting was that Pakistan may not import more than 900,000 tonnes of wheat against the earlier decision to import 1.5 million tonnes. — Reuters/File

ISLAMABAD: With Punjab’s reluctance to finance subsidy, the Economic Coordination Committee (ECC) of the cabinet on Thursday allowed cancellation of a tender for import of 150,000 tonnes of wheat over suspicious activities of the bidders and ordered the Trading Corporation of Pakistan (TCP) to go for small tenders in a gradual manner.

A meeting of the ECC presided over by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh, however, remained inconclusive over the quantity of wheat to be imported during the current season. The sense of the meeting was that Pakistan may not import more than 900,000 tonnes of wheat against the earlier decision to import 1.5 million tonnes.

Sources said the second ECC meeting in as many days only discussed the issue of wheat import and remained tense. The Ministry of National Food Security and Research (MNFSR) reported that Punjab had refused to finance the additional cost of Rs500-600 per 40kg subsidy and asked the Ministry of Finance and the ECC chairman to speak to the chief secretary.

The cost of subsidy for import of 1.5 million tonnes of wheat was earlier estimated at about Rs22 billion and Punjab was expected to foot the import bill for about 700,000 tonnes. It was also pointed out that unnecessary imports could also have negative impact on domestic crop next year and, therefore, a careful balance needed be struck to ensure that wheat prices for consumers did not increase and farmers got incentive to grow enough crops next year.

The Punjab government had reportedly conveyed that it made little sense for it to provide its wheat to other provinces and various stakeholders at lower rates firmed up under the federal government’s umbrella and then extended Rs500-600 per 40kg subsidy for imported commodity when it still had comfortable stocks.

Allows cancellation of tender for import of 150,000 tonnes over suspicious activities of bidders; Punjab reluctant to provide subsidy

The sources said the question of additional imports as desired by the prime minister again cropped up during the meeting. A senior cabinet member claimed that he had attended the said meeting and the prime minister had not asked for additional imports but for rechecking the data regarding domestic produce, available stocks and consumption requirements.

Also, an official is reported to have raised suspicions about the collusive activities of the bidders for import of 150,000 tonnes of wheat that attracted a bid price of $274 per tonne against $235 for earlier tenders.

When Dr Shaikh reportedly asked if there was any evidence on record, he was told that identical bids showed collusion. After including incidentals, etc, the total imported price of wheat worked out at about Rs2,000 per 40kg against the local rate of about Rs1,400.

Therefore, the ECC allowed the authorities concerned to cancel the last tender and consider lowering the import requirement to 900,000 tonnes from 1.5m tonnes if Punjab was not on board as the finance ministry could not spare funds from the budget. “It was decided that the TCP will start importing wheat in the required quantities through small tenders from time to time to maintain the wheat supply at a reasonable price and for keeping additional strategic reserves,” said a brief official statement.

It said the ECC discussed in detail the need to import wheat through public and private sectors. Dr Shaikh said the availability of wheat was an important issue and there was a need to maintain sufficient stock of the commodity in the country which could be made available at a reasonable price.

The MNFSR in its summary said the TCP had floated international tenders and shared the outcome on price and quantities. It said the provincial governments were contacted for obtaining allocation of 700,000 tonnes for Punjab, 300,000 tonnes for Khyber Pakhtunkhwa and 500,000 tonnes for the Pakistan Agricultural Storage and Services Corporation (Passco) for strategic stocks.

Later, KP and Sindh endorsed the quantity of 150,000 tonnes each, but Punjab did not agree on price above Rs1,400 per 40kg. It said the TCP had resultantly awarded tenders for 330,000 tonnes at Rs42,554 per tonne or Rs1702 per 40kg.

At a weekly meeting of the National Price Monitoring Committee headed by the prime minister, the MNFSR was directed to submit a new summary to the ECC for import of 1.5 million tonnes of wheat as approved earlier by the ECC.

Concurrently, the import of wheat on a government-to-government basis with the Russian Federation was under way. Passco was nominated as procurement agency for Pakistan to negotiate terms and conditions with the Russian side for import of at least 200,000 tonnes of wheat.

Published in Dawn, September 18th, 2020