SATURDAY MARCH 10: Urea import delayed: foreign supplier fails to make shipment

KARACHI: Urea import is delayed as an international supplier has failed to make shipment of 50,000 tons of urea as per the agreement and after getting 20 days relaxation seeking another two weeks grace period for supply of the commodity. Following the directives of the federal government, Trading Corporation of Pakistan is engaged in the import of urea on high priority to fill the supply and demand gap in the domestic market.
The market is facing acute shortage of the commodity owing to gas crisis. Under the second phase of urea import, TCP finalised deals for the import of some 0.5 million tons of urea through auction with pre-qualified bidders.
Sources told Business Recorder on Friday that a deal for the import of 50,000 tons of urea was finalised with Global Energy and Commodities Exchange (local agent Green House), which participated in TCP's urea import bid and agreed to supply urea at $431 per ton with expected delivery in the third week of February 2012.
As per the tender's term and conditions, after finalising the deal, all successful bidders were required to submit their shipment plan with the corporation to ensure timely supply of the commodity. Accordingly, Green House on behalf of Ms Global Energy and Commodities Exchange also submitted shipping schedule according to which, Mv DENIZ-M will start loading from Jebel Ali Port of UAE as on February 17, 2012. However, the company failed to make shipment as per schedule given to TCP and requested for relaxation in supply period.
TCP, imposing a penalty of 30 cents per ton per day, granted an extension of 20 days and allowed the Global Energy and Commodities Exchange to make shipment till March 6, 2012, without delay. However, again the supplier has failed to meet the deadline and not ensured supply as per schedule. Global Energy has approached TCP for further grace period, sources added. "After availing 20 days extension, international supplier is seeking another 15 days for supply of the commodity and has assured TCP's management that urea will be delivered by March 20, 2012," they added.
In response to supplier's request, TCP granted another 7 days for shipment instead of 15 days as demanded by the bidder, However, TCP also enhanced the amount of the penalty. Now a fine of 35 cents per ton per day will be imposed on the bidder and it has also been asked to make shipment till March 15, 2012. An amount of Rs 107 million of performance guarantee has already been deposited with TCP. The amount will be withheld if the bidder fails to make shipment.
Sources said the supplier has assured TCP officials that loading of urea from Jebel Ali port will start from March 12, 2012 and consignment will reach Gwadar Port some time next week. Sources said the second extension in the supply deadline has sparked concerns for TCP and now it is closely monitoring the whole situation to ensure timely shipment.
TCP is making all-out efforts to ensure supply under the already signed contract as if the delivery was not matured, TCP will be required to issue another tender for procurement of 50,000 tons urea, TCP official said. Further delay in import of urea will result in huge financial losses to the exchequer as presently prices of urea are on increase in international market, he added. Re-tender process of urea procurement will take almost one month, therefore, TCP is trying to complete procurement through already signed contracts, he added.