In a previous bidding, one of the sugar mills had offered the lowest price of Rs63 per kg while other bidders offered higher rates. Tenders were cancelled on the directive of the ECC when it was told that the wholesale price in the open market was less than Rs50 per kg. - File photo

ISLAMABAD: With sugar mills reducing their bid price by about Rs17 per kg, the Economic Coordination Committee of the cabinet on Tuesday decided to purchase 378,000 tons of sugar for strategic reserves, but a dispute between Punjab and Sindh over fertiliser exchange remained unresolved.

The meeting presided over by Finance Minister Abdul Hafeez Shaikh also rejected a request by the ministry of railways for condoning violation of Pakistan Procurement Regulatory Authority (PPRA) rules in the procurement of 75 locomotives from China, saying exemption or 'condonation' of PPRA rules could be granted only by the cabinet or the prime minister.

The ECC also approved appointment of a consortium led by IBIC of China and comprising Habib Bank Limited and ERNST-Young-FORD-Rhodes-Sidat Hyder as financial adviser for the $1.25 billion Iran-Pakistan gas pipeline project to arrange financing within 12 months to implement the project for delivery of gas by Dec 2014. UREA DISPUTE:

The meeting was informed that about 23,497 tons of urea lying with Trading Corporation of Pakistan from Sindh's surplus quota was diverted to Punjab last season with the understanding that it would be returned to Sindh later this season. Punjab has returned about 5000 tons to Sindh, but the price of the remaining quantity of about 18,428 tons had gone up. Punjab was ready to return this quantities but at the old price at which it had procured against Sindh's quota.

The meeting was informed that the price had gone up since then and Punjab was not ready to pick up the difference of about Rs50 per bag or Rs479 million which the ministry of industries proposed should be picked up by the federal government.

The ministry of finance refused to take over the liability. The ECC, therefore, constituted a committee led by federal finance secretary and comprising secretary of industries to take up the matter with the Punjab chief minister and to request him to bear the price differential. SUGAR PROCUREMENT:

In a previous bidding, one of the sugar mills had offered the lowest price of Rs63 per kg while other bidders offered higher rates. Tenders were cancelled on the directive of the ECC when it was told that the wholesale price in the open market was less than Rs50 per kg.

The re-tendering resulted in the lowest price of Rs46,250 per ton (Rs46.25 per kg) offered by two sugar mills – Sheikhu and Hussain Sugar Mills. Since the ECC had earlier imposed a restriction of purchasing 10,000 tons from a mill, the TCP could finalise deals only for 20,000 tons.

The meeting was informed that the government could be taken to the Supreme Court if it purchased higher quantities from the two mills that were ready to offer more quantities because this would be considered a deviation from an earlier ECC decision and PPRA rules.

Therefore, the ECC decided in principle to offer other bidders to match the lowest price for procurement of not only already approved quantities of 200,000 tons but also additional quantities of 178,000 tons that other sugar mills had indicated to provide at the matching price of lowest bid, taking the total procurement at 378,000 tons. The meeting decided to approve the deal at Rs46.25 per kg because it was the last day of the validity of the tender and would present it to the federal cabinet for formal approval to procure higher quantities in view of the applicability of PPRA rules. LOCOMOTIVE PROCUREMENT:

The ECC discussed at length a request by the ministry of railways for grant of 'condonation' of deviation of PPRA rules in purchase of 75 locomotives from China. It, however, concluded that the matter could only be tackled by a higher forum of the cabinet. He directed the railway ministry to seek cabinet's help on Wednesday because the ECC did not have powers to do so.