The Trading Corporation of Pakistan (TCP) is unlikely to open letter of credit (L/C) for 100,000 tons of white sugar for which tender had been awarded to a Chinese company Yunnan Coal Chemical Industry Group.
Although this step will be contrary to the federal government's sugar import plan finalised last year by the Economic Co-ordination Committee (ECC) of the Cabinet, Industries Minister Hazar Khan Bijarani has accepted responsibility for convincing the ECC that this tender is needed to be scrapped.
Sources said that the TCP had approached Yunnan Coal, seeking its viewpoint about opening of L/C, but the firm did not make any commitment in this regard. Last year, the government had decided to import 1.2 million tons of white sugar to bridge the gap between the local production and requirement. However, the TCP managed to materialise L/Cs for 1.1 million tons.
TCP had sought comments of Law Ministry on the issue of Yunnan Coal. The Law Ministry had previously accused TCP Chairman Anjum Bashir of violating the 1973 Constitution of Pakistan by adopting discriminatory and non-transparent methodology in white sugar contracts. It had taken strong exception to the letter directly written by the TCP.
"Previously, TCP Chairman was in violation of Articles 24 and 25 of the Constitution of Pakistan, 1973 by adopting discriminatory and non-transparent methodology which was not supported by the Ministry of Law," sources quoted Law Ministry as having said.
With regard to Yunnan, the Law Ministry commented that some state functionaries invariably try to circumvent the Rules of Business, and the case in hand is the worst example of the same as the Chairman of a private limited company had absolutely no authority vested in his office to write directly to Law Ministry.
"Chairman TCP has since opted to write to Law Ministry and violated the law to his advantage by not communicating to the Commerce Ministry for submission of proper reference which is the requirement of Rules of Business 1973. Therefore, direct communication has neither any legal sanctity nor merit," said Section Officer of Law Ministry Dost Muhammad in his letter to the TCP Chairman, who is a Grade 21 officer.
The Commerce Ministry had suggested that TCP should take decision on its own with regard to cancellation of second contract of Yunan, which defaulted on its first contract of 100,000 tons of white sugar. Yunnan--a pre-qualified supplier of the TCP through its local agent Simzain International--had participated in the 9th tender of 200,000 tons, opened on May 15, 2010, and had offered to supply 100,000 tons of sugar at $488 per ton.
Sources said Bijarani would argue in the next ECC meeting that since the crushing operation has already started in three provinces, TCP may be allowed not to open L/C for 100,000 tons of white sugar. Earlier, TCP had started the process of blacklisting Yunnan Coal for misleading it on sugar import, causing billions of rupees loss to Pakistan, but now it is unclear if the process would be completed or not.
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