KARACHI: The Trading Corporation of Pakistan (TCP) under a contingency plan is purchasing 0.2 million tons of sugar from mills to beef up its strategic reserves to 0.678 million tons.
The state-owned corporation is also procuring 0.2 million tons of urea and is going to open import tender on Thursday.
With this,total import of urea for Kharif season will come to 0.3 million tons.
This was stated by TCP chairman Tahir Raza Naqvi at a media briefing held in the board room of the corporation here on Wednesday.
He said fresh purchase of sugar is also being done in anticipation of expected surge in consumption during Ramazan.
He said that the TCP had a credit line of Rs115 billion from a consortium of six leading banks for its commodity operations for a period of three months (July to Sept).
Though the TCP imported around 1.1 million tons of sugar during the last three years, this year on higher sugar production in the country, the corporation purchased around 478,000 tons from mills and made payment of Rs22 billion. However, Mr Naqvi said that to built upon strategic reserves and to meet surged demand in Ramazan the TCP is purchasing another 0.2 million tons from mills.
The corporation also meets demands emerging from Utility Stores Corporation (USC), provincial governments, Sunday Bazars and CSDs and army.
The corporation will be paying around Rs30 billion for purchase of 0.2 million tons of sugar which will take the total cost of sugar operation to Rs32 billion this year.
However, the TCP, he said, is paying heavily towards taxes and had paid Rs3 billion on sugar purchase at 8 per cent sales tax.
The permission for price matching for the upcoming tender of 100,000 tons urea import, he said is awaited and small bids with a minimum quantity of 75,000 tons are allowed because huge funds are required by importers for bid bond and performance bond. He said that the TCP imported 1.2 million tons of urea for Rabi season during six months, starting October 2011 to March 2012 and got soft loan from Saudi Arabia.
The urea import cost during July 2011 to June 30, 2012 was at Rs79 billion and out of this the government paid Rs51 billion towards subsidy or price difference to the TCP.However, Tahir Raza Naqvi was critical of the role being played by National Fertiliser Marketing Ltd (NFML) and said that normally timely imports by the TCP fail to reach growers because the NFML lags in distribution schedule.
Similarly, he said TCP has to incur extra cost towards payment of mark-up to banks because NFML holds back payments even after recovery is made.
Another irritant being faced by the TCP with the NFML, he said, is non-payment towards excess quantity of urea taken by the marketing company.
On a question, Mr Naqvi said that around 3,600 tons of excess urea is being billed to NFML but so far no response is being received.
However, he said, in future TCP would retain excess quantity of urea received from ships and would directly auction it and earn substantial amount.
On urea purchase, he said, the TCP spent Rs80 billion and paid Rs20 billion towards duty and taxes at an average rate of 25 per cent.
Mr Naqvi said that the TCP is a profit making entity and has sound financial health and its operations are strictly carried out under PPRA rules which are also monitored by Transparency International and private sector representatives from FPCCI.
He said under reform agenda, TCP would in future have private sector people on its board and plans to set up a warehousing company under public-private partnership.