Following the Sindh High Court (SHC) order, the Trading Corporation of Pakistan (TCP) has decided to sell out 50,000 tons of sugar in open market at a uniform rate of Rs 60,000 per ton to all bidders instead of different rates.
On September 21, TCP was directed by the Economic Co-ordination Committee (ECC) to offload imported sugar in open market to overcome sugar crisis and curb the soaring prices commodity in domestic market, as provinces were completely failed to sale subsidies imported sugar in domestic market at low rates during Ramazan.
The state run grain trader issued two sugar tenders of 25,000 tons of each during last week of September and invited bids from wholesalers, retailers and traders to sale 50,000 tons of commodity in open market. To avoid any speculation and ensure transparency in the tender, the TCP also decided to offload sugar in open market with a minimum lot of 50 tons and maximum lot of 500 tons.
In response to TCP tender, the first tender opened on October 4, 2010 and second on October 7, with participation of 141 and 127 parties respectively from all provinces. In the first tender the TCP received a maximum bid price of Rs 68,500 per ton for a quantity of 500 tons. However, TCP tender committee and executive committee of the board did not adopt price matching formula and decided to sale complete quantity of 25,000 ton to all those bidders' submitted bids above landed cost, which was Rs 59,000 per ton.
Under the first auction, TCP sold 24,800 tons of imported sugar to 58 parties different prices ranged between Rs 59,060 per ton to Rs 68,500 per ton (excluding 8 percent sales) on ex-godown basis with an weighted average price of Rs 61,296 per ton at the total cost of Rs 1.520 billion.
While in the second tender TCP has awarded tender to 55 different parties from all the provinces and sold a quantity of 25,200 tons at a weighted average price of Rs 59,908 per ton at the total cost of Rs 1.5 billion. Two bidders, namely Fatima Enterprises and Maryam Enterprises submitted highest bids in the first tender, approached court against the TCP decision that Corporation without using price matching formula has sold sugar at different prices to several parties.
The bidders pleaded in the Sindh High Court that TCP has not sold all sugar to highest bidder and sold out commodity on different prices, which is illogical. On the petition of bidders the Sindh High court issued notices to the TCP and after hearing the Sindh High Court has asked TCP to sale commodity at a uniform rate of Rs 60,000 per ton to all bidders participated in the first tender.
Although, the court decision was for the first tender, however, the TCP's executive board has decided to sale all 50,000 tons of sugar at Rs 60,000 per ton to avert any other legal action from any bidder. With current decision the Corporation will earned Rs 3 billion with sale of 50,000 tons of sugar in open market.
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