The Pakistan Agriculture Storage and Services Corporation (Passco), which is a loss making public sector entity, is reportedly selling Basmati and Irri-6 rice to 'blue-eyed' buyers at unjustified prices, sources told Business Recorder.
Sources said that Passco finalised the deals one day before the scheduled meeting of the Economic Co-ordination Committee (ECC), which was destined to allow export of rice to any country on government to government basis.
Last year, Passco had procured Irri-6 damaged rice at Rs 34,250 per ton and sold it at Rs 11,000 per ton, inflicting heavy loss on the national exchequer. Additionally, under government intervention program it also purchased a huge quantity of Basmati and Irri-6. The quantity of Irri-6 was nearly 220,000 tons at government procurement price of Rs 34,250 per ton both from Punjab and Sindh. Of this, the state owned corporation, sold about 67,000 tons of damaged rice at Rs 11,000 per ton, inflicting Rs 24000 per ton loss, totalling Rs 1,541,000,000.
In the case of Basmati, Passco procured rice at Rs 65,000 per ton but offered a price of 55,000 per ton for two tenders.
Recently, Passco received two bids--one for 10,000 tons and another for 2,000 tons at Rs 50,000 per ton, clearly resulting in a loss of Rs 10,000 per ton. This implies that the total loss in the deal is about Rs 120,000, 000. If Passco sells all the remaining quantity of 488,000 tons Basmati rice at the same price as was sold previously, the loss will be Rs 488,000,000, excluding carryover cost, financial cost of one year, transport cost and storage cost.
Another interesting aspect of this episode is that Passco has sold 50,000 tons Basmati rice at Rs 60,000 per ton and 77,000 tons at Rs 70,000 per ton to the same party from whom it procured at Rs 84,000 per ton.
Sources said that Passco sold rice to the party on credit for 3 months, which implies they will sell the commodity at prices higher than in the market. According to sources, Passco has to further incur interest (financial cost), carrying over charges, godown rent, pilferage, etc.
It is pertinent to mention here that the corporation's daily colossal rate of interest to the financing bank is about Rs 11.5 million rupees.
Pakistan harvested a record rice crop of 6.9 million tons in 2008-09 against 5.6 million tons the previous year. To stabilise the price of rice in the backdrop of record domestic crop and fairly good global production, the government decided to procure 1.0 million tons paddy (0.5 million tons from Punjab and aggregate 0.5 million tons from Sindh and Balochistan).
This year, Passco was authorised to purchase Super Basmati paddy at Rs 1500 per 40 kg and Irri at Rs 700 per 40 kg. Passco purchased 0.461 million tons of Super Basmati paddy from Punjab and 0.214 million tons of Irri-6 paddy from Sindh and Balochistan. Total procured quantity was 4,35,832 tons, of which 2,18,382 tons was Super Basmati, 3,297 tons Basmati 2000/385, 1,57,931 tons Irri-6(FAQ), and 55,222 tons Irri-6 (rain damaged).