SATURDAY MARCH 17: Delay in wheat offloading: Passco accused of inflicting Rs 2.75 billion loss to exchequer

ISLAMABAD: Economic Co-ordination Committee (ECC) of the Cabinet has reportedly accused Pakistan Agriculture Storage and Services Corporation (Passco) of inflicting a Rs 2.75 billion loss to national exchequer by delaying offloading of wheat stocks of 2010 crop, well-informed sources told Business Recorder.
Secretary Cabinet, Nargis Sethi, has been assigned to investigate the causes of delay in submission of a summary to the ECC for offloading wheat crop of 2010. The sources said stocks with Passco amount to 1.75 million tons from 2010-11 crop of which 0.25 million tons would be released to deficit provinces and World Food Programme (WFP), while 0.5 million tons would be kept as strategic reserves.
Thus, Passco will have surplus wheat stock of one million tons. The ECC on April 11, 2011 had allowed sale of 0.2 million tons of wheat at Rs 25,000 per ton (plus packing material) for export purposes but no wheat could be exported due to cost differential of Passco's wheat and international market price.
Passco maintained that because of downward trend of international wheat prices, disposal of its surplus stock through exports will not be possible and other avenues need to be explored for off-loading the surplus stocks before the next crop comes in the market in May 2012.
The sources said private sector had shown substantial interest in purchase of wheat from Passco at Rs 950 per 40 kilogram plus cost of bag. In that case the government has to pay Rs 6.045 billion on sale of one million tons of wheat. On the other hand, if the present excess stocks are not off-loaded, the federal government will have to bear Rs 4.889 billion in terms of financial and storage cost.
Early disposal of the surplus wheat stocks will save Rs 4.889 billion out of Rs 6.045 billion per year. Besides, there will be a saving on account of vacated storage space. Finance Division has supported the sale of one million tons of wheat by Passco and has agreed to pick up the subsidy on actual basis in accordance with existing procedure relating to subsidies claim.
After threadbare discussion on the issue, the ECC allowed Passco to offload 0.45 million tons of wheat of 2010 crop out of 1.75 million tons wheat stocks' held by Passco, to domestic buyers at Rs 950/40 kg without bag. The cost differential would be picked up by the Finance Division at Rs 6,045 per ton as subsidy.