In July of 2020, Economic Coordination Committee allowed provincial governments, Passco and The Trading Corporation of Pakistan (TCP) to import wheat and sugar in the country, along with the private sector.
Last year, the country faced a shortage of wheat and sugar in the market driving up the prices, thus the government this year is allowing building stock beforehand to counter the lower supply and eventual increase in prices after having another bad production year.
Thus, last month Economic Coordination Committee of the federal cabinet approved the import of 500,000 tonnes of refined sugar and 300,000 raw sugar for the sugar millers to build carryover stock in the country. It also allowed the import of 300,000 tons of wheat to create strategic reserves before the arrival of the next crop in the coming April/May period.
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Over the last seven months, the government has imported 2.91 million tons of wheat of $794.59 million in value compared to none in the preceding year, and similarly, the import of sugar was 278,482 tonnes compared to 3,744 tonnes in the preceding year.
The private sector has been allowed to import 300,000 tons of sugar at a reduced rate of withholding tax from 5.5 percent to 0.25 percent. The Trading Corporation of Pakistan will import 500,000 metric tons of sugar at a reduced withholding tax rate while a 17 percent sales tax has also been abolished.
Following this, TCP issued international tenders and invited sealed bids from wheat suppliers via their local offices or through representatives for 300,000 metric tonnes(5 percent variation) of wheat. Its international wheat import tender was opened on 2nd March and seven suppliers participated. Prices ranging from $332.44 per metric tonne to $352.95 per metric tonne were quoted.
Also, on February 19th, the TCP invited sealed bids from international white sugar suppliers/manufacturers for the supply of 50,000 metric tonnes(5 percent variation) via their local offices or representatives. Its tender was also opened on 2nd March and two suppliers namely Al-Khaleej Sugar Dubai and Sucden Middle East participated in the tender with quoted prices of $540 per metric tons and $580 per metric tons, respectively.
However, the quoted prices of both tenders were higher and thus the board of directors canceled both tenders. Bidders were informed of the cancellation.
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TCP is likely to issue a fresh tender for the import of sugar. Historically, the private sector has successfully imported sugar to meet the local demand and if the government wants to avoid the subsidy on imported sugar, may allow the private sector to import more sugar for domestic consumption.