ISLAMABAD: With no response from Russia regarding wheat supply to Pakistan on a government-to-government (G2G) basis, Islamabad decided on Tuesday to accept 500,000 tonnes of open international tenders for import of major staple commodity at a much lower rate than earlier.

The Economic Coordination Committee (ECC) of the cabinet led by Finance Minister Miftah Ismail also directed the authorities concerned to get back with a definitive opinion based on engagements with the other side by July 20 if Russian wheat could be arranged on a government-to-government basis or else more tenders should follow.

The ECC took another major decision to facilitate trade from Afghanistan by allowing it in rupees for one year and also earmarked 120,000 tonnes of wheat to Kabul for 2022-23 under the World Food Programme.

Informed sources said the meeting was informed that Moscow had been requested for wheat trade more than a month ago and then followed up, but no response had been received as of now.

No response from Russia over wheat supply to Pakistan on G2G basis

In the second week of May, the ECC allowed duty- and tax-free import of three million tonnes of wheat, including 2m tonnes as a government-to-government from Russia and 1m tonnes through open international competitive tender.

The Trading Corporation of Pakistan (TCP) has already given contracts for the first tender of 500,000 tonnes at the rate of $515.5 a tonne for delivery windows of July to August.

The meeting was informed that the second tender for another 500,000 tonnes had fetched almost 15pc lower rates at about $440 per tonne compared to the first tender, which had a $76 per tonne higher price.

“The ECC, considering the lower trend of wheat in the international market, approved the lowest bid offer of M/s Cargill Int. PTE /Cargill Agro Foods Pakistan at the rate of $439.40 per tonne for 110,000 tonnes with plus-minus 5pc [more or less seller option] to the extent of 500,000 tonnes,” an official announcement said.

The meeting was told that the two next bidders — Viterra BV/Marine International and Falconbridge — had also come with very close bids of $439.69 and $439.99 per tonne for 240,000 and 110,000 tonnes, respectively.

The bids have a very limited acceptance window. The landed estimated cost at port works out at about Rs102.851 per kg or Rs4,114 per 40kg. The commodity would be delivered between August and Sept 15.

On the request of the World Food Programme (WFP) of the United Nations, the ECC approved the request to reserve 120,000 tonnes of wheat for Afghanistan from the imported wheat stock of Passco on the latest import price in view of the situation in the neighbouring country and on humanitarian grounds.

The amount of supplied wheat, along with cost and incidentals, would be charged in US dollars. The wheat will be locally ground into wheat flour and will be supplied to Afghanistan by the WFP, subject to relaxation of a ban on flour exports to the extent of the instant proposal of 120,000 tonnes of wheat, an official announcement said.

The ECC also approved another summary to amend paragraph 3(1) of the Import Policy Order 2022 to allow the import of goods of Afghan origin against the Pakistani rupee and without the requirement of Importers Electronic I-Form (EIF) for one year, subject to the condition that Afghan exporters will provide a certificate of origin issued by Afghan customs proving that the goods have originated from Afghanistan.

The meeting was told that because of the political and economic situation in Afghanistan and the absence of formal banking infrastructure, transactions had been badly impacted. Afghanistan would benefit from the relaxation that has already been in place for 14 items since April 14 this year to export fruits into Pakistan.

Published in Dawn, July 6th, 2022