Import of white sugar during 2010: TCP asked to conform its tender terms to international standards

Trading Corpora-tion of Pakistan (TCP) has been directed by the government that its tender terms for the import of white sugar during 2010 should be in conformity with the international standards in order to provide a level playing field to all origins.
Following complaints by the stakeholders against TCP's tender terms and conditions the matter was taken up with concerned ministries, who then raised the issue in the last meeting of Economic Co-ordination Committee (ECC) held on January 12, 2010, wherein the decision was taken.
It is actually in the tender terms and conditions that the gimmick is played, therefore, the aforesaid ordered was issued to TCP. Of the three tenders floated by the TCP, the first tender for import of 150,000 metric tons white sugar will be opened on February 6 but the terms and conditions are still not ready.
The import department of TCP, when contacted by Business Recorder on Thursday in this regard said that these were still under preparation, though it is clearly mentioned in the tenders that "detailed terms and conditions of tender can be purchased on payment of Rs 1000/ on all working days from 9 am to 5 pm."
Generally, stakeholders say these documents are made available just about a week before the actual opening of the tender. Although, the TCP has denied all out support to one party, stakeholders fear repeat of 2009 sugar import story. During 2009 importation, originally the tender terms, which were formulated immediately after the TCP chairman's visit to Dubai were totally non-commercial and tenders were invited on the basis of Duty Delivery Un-paid (DDU). In that tender document the packing clause was as under:
"In standard export packing in new polypropylene (PP) bags with an inner polythene lining. The contents of sugar in each bag should be 50 kg net. The bags should be strong enough to withstand wear and tear in transit. The total weight of empty bag and inner lining should not be less than 135 grams." It appeared that these delivery terms were made not to allow shipment from origins other than Dubai.
According to stakeholders with such tender terms even the local costs involved, ie stevedoring, transportation etc were supposed to be paid in US dollars. This was only to the advantage of the seller since container freight from Dubai is very cheap and the local agents of the seller, who operate a discharging and transportation cartel, would be able to manipulate quantity and quality of the sugar.
Since these delivery terms were not acceptable to any of the international sellers, when protests were lodged by all prospective bidders, TCP changed the delivery terms to conform to international terms ie CNF Free Out basis and prohibited shipment in containers. However, at the same time, TCP changed the packing clause to suit the said Dubai-based refinery.
Stakeholders say that TCP is hiding behind the Pakistan Standards & Quality Control Authority's (PSQCA's) guidelines, which itself are very clear and states in Pakistan Standard for polypropylene woven sacks for packing sugar PS 3128-2008 (r) point no. 0.3: "It is recognised that this standard does not attempt to cover all the varieties of polypropylene bags that may be in demand either in the local or foreign market or official agencies. It is, therefore, in no way implied that such varieties are not to be manufactured. This standard does not prompt to include all the provisions of a contract."
It is evident that the attempt was to restrict all major sugar producing and exporting origins such as Brazil, EU and Thailand. The quality of PP bags from these origins is far superior than the required specifications of TCP, which requires the total weight of PP bags including the polythene liner to be of minimum 135 grams whereas the weight of bags from these origins including polythene liner is minimum of 150 grams. The only issue is the dimensions of the bags because the international bags are 10 mm shorter in length as they are wider.
Stakeholders had brought this to the notice of TCO officials throughout 2009 but TCP did not consider any requests and went along with these non-commercial terms. As a result 200,000 metric tons of sugar imported in 2009 was all supplied by the Dubai-based Refinery. Further, out of the contract a considerable portion was allowed to be shipped in containers which were a violation of the tender terms and the contract, whereby the Dubai-based refinery was allowed to make extra profit because container freight from Dubai is far less than break bulk freight.
It may be pointed out that during the imports of sugar from May 2009, two tenders of 50,000 metric tons each were awarded on May 16 and 23, 2009 to the said Dubai based refinery but the tenders which were due to open on May 30, 2009 and June 6, 2009 were scrapped less than 24 hours before the opening because the Dubai-based refinery would have faced logistic problems had TCP purchased under the tender.
At that time the international FOB price was about USD 445 per metric ton (pmt). However, when the quantity was re-tendered and awarded to the same Dubai-based refinery about three months later, the FOB price in the international market was about USD 595 pmt, causing a loss of about USD 15 million to the exchequer against the import of 100,000 metric tons.