Trading Corporation of Pakistan (TCP) is to decide the fate of two sugar contracts of 150,000 tons awarded to two different importers, on Saturday (July 17), as both parties are said to have virtually defaulted, well-informed sources told Business Recorder.
Pakistan's embassy in Brazil from where this sugar was to be imported has sent a clear message to the GoP that shipment of contracted sugar is doubtful, the sources added. "Yes, the executive committee of the Board of Directors of TCP is meeting Saturday (today) to discuss important issues including sugar contracts with M/s Yunan and M/s Sadat," said TCP Chairman S Anjum Bashir, in a Short Message Service (SMS) to this correspondent on Friday.
This was in response to this correspondent's query as to whether an emergency meeting of BoD has been called for Saturday to decide the fate of M/s Sadat and Yunan. Chinese firm, M/s Yunan Coal Chemical Industry Group C Limited awarded a contract for 100,000 tons and M/s Sadat Business Group Limited, Dubai awarded a contract for 50,000 tons have failed to provide shipment schedule to the TCP as per the contract despite getting 10 days extension with penalty.
Both the parties as per the tender terms were required to make first part of shipment by July 16, 2010. This is being confirmed by the two contractors, however, the information available belies their claims, sources added. Recently, the TCP chairman apprised this correspondent that if both the parties default, their performance guarantee which is around one million dollars will be forfeited. On July 15, 2010, one of the sugar suppliers Dr Ajmal told this scribe that M/s Sadat's first shipment date is July 18, 2010, which is contrary to the claims of the TCP chairman.
"Our first shipment date is 18th July and in the next three hours we are going to nominate the vessel. The delay was due to problems of LC, which was resolved three days ago. We will be delayed by only five days so hopefully we will give the documents of the first vessel to TCP on 28th July," Dr Ajmal said. When contacted, Dr Ajmal said M/s Sadat has nominated the vessel and has promised to send the documents but till filing of this report, he had not sent anything.
According to an official TCP document, M/s Yunan Coal Chemical industry Croup Co, China's LC was opened on June 15, 2010 and its first shipment was due on July 15, 2010 without penalty and after July 15 with penalty. For M/s Sadat Business Group, Limited Dubai, the first shipment schedule was July 5, 2010 and with penalty July 15.
The standard language of the contracts between the TCP and the suppliers is as follows:
DAMAGES: If the goods are not delivered within the contracted period of delivery, the seller shall be liable to pay to the buyer on demand without any question whatsoever, damages on account of extra expenditure, loss of revenue or loss of industrial production in the buyer's country and loss of other benefits to the buyer. The quantum of such damages will be determined at the sole discretion of the buyer.
26. CANCELLATION OF CONTRACT: If the seller fails to deliver the goods within the specified delivery period for reasons other than force majeure, the buyer shall be entitled at his option to cancel the contract and recover the damages besides forfeiture of performance guarantee. The buyer shall not be liable to any risks and costs whatsoever in consequence of such cancellation of the contract.
27. ARBITRATION: Any dispute or difference arising out of contract which cannot be amicably settled between the parties, shall be finally settled under the provisions of the arbitration Act 1940 (Act no. X of 1940) and rules made thereunder as amended from time to time. The venue of arbitration shall be Karachi, Pakistan.
According to an earlier report published in Business Recorder if TCP fails to import 1.2 million tons of sugar before the start of August, the country can experience its worst-ever sugar crisis, an official of Pakistan Sugar Mills Association (PSMA) said. The TCP chairman has already been criticised by the ECC and the Cabinet for not importing the required quantity of white sugar in light of the decision taken at the highest official level.
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