LAHORE, May 23: In what appears to be a case of blatant discrimination against the local mills, the Trading Corporation of Pakistan (TCP) is trying to sell its cotton to exporters despite the very fact that they have offered a far lower price than the local buyers.
Sources in the All Pakistan Textile Mills Association (Aptma) told Dawn on Monday that the TCP was favouring the cotton exporters at the cost of the local textile industry by trying to sell its stocks for export at a price which is at least 10 per cent less than offered by local buyers.
The sources said the local mills had offered between Rs2,200 and Rs2,321 per maund to the TCP as against Rs2,050 per maund for cotton put to sale by the TCP through the newspaper advertisements issued on April 18.
“However, the TCP has asked the highest bidder from local buyers to raise its bid price to Rs2,340 per maund from the offered Rs2,321 per maund. On the other hand, the exporters have been asked to raise their bid only to Rs2,150 per maund from Rs2,050 per maund. This clearly manifests a bias against the local industry,” the sources said.
He said the local buyers had been given time till 3pm on Monday (yesterday) while the exporters till Tuesday (today) for accepting the price given by the corporation, allowing the latter to decide whether it suited them to pay the price demanded by the TCP or not after checking the New York Cotton Futures market.
“It is amazing that when it has to sell cotton to the local mills, the TCP wants to pass on all its losses to them. But when it has to sell its cotton to the exporters, the corporation is even ready to subsidize them at the expense of the local industry,” the sources said.
In the meanwhile, Aptma chairman Arif Saeed has sent a letter to the corporation’s chairman Masood Alam Rizvi, saying the terms and conditions for inviting the bids for export and local sale of cotton by the TCP clearly show that these discriminate against the local buyers and favour the exporters of cotton although the country’s national interest demanded that the Pakistani consumers of cotton should be given preference or at the very least equal opportunities to buy the cotton procured by the TCP.
Aptma points out that the terms and conditions offer the local buyers about one month shipment/delivery period as against a little over two months offered for export.
Besides, the carrying/storage charges in case of the local sale are Rs2 per maund for 30 days, which come to about 2.7 per cent per maund per month. The same condition for sale to the exporter is 1.5 per cent of the bid value per month although both the local mills and the exporters should have been offered the same.
Local buyers have been asked to pay 100 per cent cash or pay order/demand draft before the delivery and the sale for export is being made against irrevocable letter of credit which curtails time for reimbursement. “This should be equal for both types of bidders,” says the Aptma letter.
Furthermore, the local buyers have been asked to deposit five per cent as against one per cent of value of offer for export, which is discrimination. In addition, cotton lifted by the exporter from Chichawatni or DG Khan godowns is on FoB basis whereas the local buyers has to pay freight charges ex-godown. “We urge TCP to allow discount of the transportation cost to Karachi in addition to the FOB expenses, which have already been taken into account in the terms and conditions,” demands the letter.