The Finance Ministry has opposed provision of Rs 440 million subsidised wheat to Utility Stores Corporation, which refused to lift the allocated stocks from Passco godowns due to higher price, Business Recorder has learnt. According to sources, the USC did not lift the allocated wheat stocks as the Corporation was reportedly purchasing wheat from the market at cheaper rates and retailing to the customers at lower prices.
The subsidy provided by the provincial governments on wheat released to the flourmills enabled the USC to compete with the open market and offer wheat flour to the general public at lower prices. The cost of Passco''s wheat to USC after adding incidental charges was worked out to be Rs 28.11 per kg, which was not feasible for USC.
The Ministry of Food and Agriculture proposed to the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting held on March 30 to consider subsidising 100,000 tons wheat to be provided to USC ex-Passco stocks, bearing incidentals of Passco to the tune of Rs 440 million.
The ECC considered the summary on "Lifting of Wheat Stocks Allocated to Utility Stores Corporation from Passco at Reduced Rates," submitted by the Ministry of Food and Agriculture and deferred its consideration, with the direction that Advisor to the Prime Minister on Finance, Revenue, Economic Affairs, Statistics and Planning and Development will review it and submit to the ECC, if required. The ECC was informed that USC has requested Passco to reduce wheat price from Rs 28.11 to Rs 25 per kg.
Passco has examined the request of the USC and despite the fact that the delay in lifting of allocated wheat would add to the storage cost progressively, has favourably considered the proposed reduction in the price of wheat for USC. The provincial governments especially Punjab government released subsidised wheat to the flourmills and the cost of incidentals is borne entirely by the provincial exchequer.
"As Passco has no budgetary cushion available and is not in a position to provide subsidised wheat to USC or any other organisation, it has requested the federal government to subsidise the wheat stocks to be provided to USC," Minfa said in its proposal. With the federal government''s assistance to Passco in shape of favourable release price on the analogy of the provincial governments, the cost of Passco wheat stocks could be reduced to Rs 25 for the USC.
The ECC was informed that during 2009, a record crop of wheat was harvested and procurement of 9.2 million tons of wheat was made by the public sector procurement agencies. Passco procured 2.1 million tons of wheat out of which the federal government allocated 202,500 tons for the USC.
The USC did not lift the allocated wheat stocks from Passco as the Corporation was reportedly purchasing wheat from the market at cheaper rates and retailing to the customers at lower prices. The subsidy provided by the provincial governments on wheat released to the flourmills enabled the USC to compete with the open market and offer wheat flour to the general public at lower prices. The cost price of Passco wheat to USC after adding incidental charges worked out to be Rs 28.11 per kg, which was therefore, not feasible for USC.
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