The government is likely to entrust the responsibility of imported wheat transportation to the provinces, after an inter-ministerial committee, headed by the Minister for Food and Agriculture (Minfa), Nazar Muhammad Gondal, accused the Trading Corporation of Pakistan (TCP) of lacking transparency in hiring private transporters, official sources told Business Recorder.
The Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on December 2, 2008 had constituted a committee with the Terms of Reference (ToRs) to thoroughly investigate the matter regarding transportation of wheat purchased by TCP from Karachi to provinces, and also to deliberate on the issue of transporters' cartel.
The committee mainly focused on the issue of transportation of imported wheat purchased by TCP, from Karachi to provinces. The mode of transportation adopted by TCP was examined analytically to determine the efficiency and cost factors. To the effect, all the stakeholders including (Minfa), provincial governments, National Logistics Cell (NLC), TCP and private transporters were consulted to receive up-to-date information on transportation of imported wheat to meet shortages.
Sources said that Minfa reported to the committee that on its proposal the ECC had decided to import 3.5 million tons wheat during the current year to meet the anticipated shortages in the country. After completion of procurement procedures, by TCP in August 2008, the bulk of imported wheat was shipped to Karachi and Bin Qasim Ports in September-October 2008. Sensing acute congestion at the ports, Minfa requested TCP to expedite the lifting of wheat and timely transportation to the deficit provinces.
The proposal of the Ministry to allow the deficit provinces to lift their allocated wheat under their own transport arrangements was not accepted by TCP. This resulted in inordinate delays in transportation of wheat to meet the shortages in the provinces. The Ministry has further conveyed that TCP has its own panel of truck owners with monopoly over wheat transportation, leading to delays and cost overruns.
The Punjab government said that due to inefficient system of transportation of imported wheat, TCP was not in a position to timely lift the stocks to match the requirements of the deficit areas. The Punjab government referred to the meeting held on October 17, 2008 under the chairmanship of the then Minister for Ports and Shipping Naveed Qamar whereby it was decided that: (a) provinces will be given preference over the lifting of stocks and all the contractors will be deployed instead of a few select ones; (b) preference for the mode of transportation shall be Railways, NLC and then private contractors; and (c) wheat will be dispatched according to the preference of the provinces as to where it will be taken and what quantity will be transported to any particular station.
Sources said the Punjab government reported that despite agreement with NLC to lift imported wheat for different areas in Punjab the TCP never allowed deployment of NLC-hired mechanical transport (HMT). It was further reported that TCP transported wheat under its own arrangement to stations that were not identified and the wheat was subsequently transported to alternative destinations causing unnecessary financial loss. Again, wheat was transported in excess quantities as compared to the allocation made by the provincial government because the freight charges for these stations were high.
The Punjab government also informed that TCP was incurring extra expenditure on shifting of wheat stock from the ports to their godowns at Pipri and Korangi including handling charges subsequent to being transported to provinces. Punjab has indicated that TCP has registered 14 contractors for transportation of wheat. However, only two contractors, namely Zahid and Wahab have been extended special treatment. None of them has any transport fleet and they hire private transporters from the market at much higher rates.
The provincial government has emphasised the need for allowing provinces to lift wheat stock through their own transport arrangement to avoid delays, excess cost and elimination of cartel in the business.
Sindh government has said that TCP is involved in transportation of wheat to different places in Sindh. The rates fixed by TCP are much higher than those obtained by Sindh government through open competition among the private transport contractors. They are further of the view that higher charges levied by TCP are ultimately shifted to the provinces. On average, a difference of Rs 20.69 per bag has been reported based on the comparison of TCP and Sindh government tendered rates.
The government of NWFP conveyed similar concerns regarding delay in transportation of imported wheat, higher cost of transportation by TCP, excess dispatch of wheat by TCP to stations not approved by the provincial governments and non-approval by TCP for operation of NWFP Food Department contractors at rates much lower as compared to TCP rates.
Balochistan reported that wheat allocated to Balochistan is being transported by TCP approved contractor Zahid Traders. The rates offered to the contractor are extremely high for transportation of wheat during the period November 2007- April 2008 for an allocation of 0.130 million tons. However, the contractor has been further allowed to transport wheat to the extent of 0.100 million tons by allowing 18 percent increase in the rates, for which the provincial government was not consulted. The increase in the rates will enhance the incidentals by Rs 600 per ton.
Balochistan government had to postpone tenders for the transportation of wheat due to the unilateral agreement by TCP with Zahid Traders. National Logistic Cell (NLC) reported that as per government notification of 1978, NLC is permitted to utilise hired mechanical transport (HMT) from private sector for transportation of goods in the country. However, restrictions imposed on the NLC by TCP will have serious implications in the face of wheat shortages in the country. The action taken by TCP is contrary to the decisions made in the meeting of October 17, 2008 held under the chairmanship of Minister for Ports and Shipping.
The main accused, TCP, responded to these accusations by arguing that subsequent to approval of the federal government to import 1.7 million tons wheat, three contractors were hired through open competition for transportation of wheat to the provinces. TCP has reported that these contractors--Zahid Traders, Classic Enterprises, and Dynamic Logistics International (Pvt) Ltd--carried out transportation of wheat to the provinces without any complaints till March 2008.
The numbers of contractors were later increased to 14 after completion of tender procedures in the same period to avoid transport cartel. TCP, however, reported that in the first phase three transporters and Railways dispatched 1.202 million tons of wheat involving a period of 122 days. In the second phase, commencing from July 2008 TCP transported 1.550 million tons against import target of 2.5 million tons over a period of 140 days.
It is further reported that against allocation of 0.223 million tons of wheat to be transported by the Railways only 0.060 million tons could be transported to the provinces owing to the shortage of Railway wagons. TCP identified different factors like strike of transporters on the ports during Ramazan, shortage of transport, closure of Kohat Tunnel and ineffective liaison on the part of the Provinces for slow transportation of imported wheat.
Private transporters stated that TCP had engaged only a few transporters for the carriage of imported wheat. However, these transporters have no arrangements of their own and subcontract it at high rates. The selected few transporters have a monopoly in the transport of imported wheat to the provinces, which needs timely correction.
Based on consultation with the stakeholders the committee has made following observations: (i) transportation of imported wheat by TCP is being carried out without consultation with the provinces; (ii) cost of transportation of the wheat is on higher side as compared to the rates obtained by the Provincial Governments through open bids; (iii) inordinate delays reported in transportation of wheat to the provinces due to stocking of wheat in TCP godowns at Pipri and Korangi with additional unnecessary expenditure incurred on account of wheat handling, loading and unloading. Lack of co-ordination between TCP and provinces as excess wheat was transported by TCP to the stations with lesser allocations by the respective provinces.
This resulted in extra cost and delays by re-transportation of the stock to designated deficit areas. The additional cost had to be borne by the respective provincial governments (iv) lack of transparency in hiring private transporters by TCP. The most economical rates were refused through open and transparent bidding for transportation of imported wheat; and (v) preferred treatment extended to some of the contractors in private sector led to monopolistic and cartel like situation, which needs proper probe through a specialised agency.
After detailed discussion the committee recommended that the responsibility for transportation of imported wheat should be entrusted to the provinces. It has also been recommended that preference for mode of transportation should be Railways, National Logistic Cell (NLC) and the private transport contractors/companies. Provinces to co-ordinate with Railways/NLC, private contractors to ensure cost effective and timely transportation of wheat stock to pre-determined destinations/centres.
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