The Ministry of Finance (MoF) has released Rs 10 billion of commodity subsidy to the Trading Corporation of Pakistan (TCP) enabling it to open letters of credit (LCs) for import of sugar. TCP was seeking immediate release of withheld payments from Ministry of Finance, provinces and other government departments to repay the banks and to open new LCs for sugar import, as its credit limit Rs 110 billion has almost finished.
Sources said that TCP had suffered a loss of about Rs 40 billion on import of wheat, urea and sugar during last two-and-a-half years, as following the directives of federal government, it had imported expensive wheat, urea and sugar and later sold at lower/subsidised prices in the domestic market.
However, as per commitment, the Ministry of Finance had not paid billions of subsidies to the TCP. Therefore, the Corporation was facing massive financial difficulties and was not able to open more LCs for import of 250,000 tons of sugar. Although TCP former Chairman Saeed Ahmed Khan had also made several attempts for the release of pending subsidy, but with continuous result-oriented efforts of the new chairman Anjum Bashir, the Ministry of Finance has released this amount.
Sources said that the Ministry of Finance has asked the State Bank of Pakistan (SBP) to provide Rs 10 billion to TCP. Following ministry directive, the central bank had granted some amount to TCP. With payment of subsidy from Ministry of Finance the consortium of banks has also opened two more LCs for the import of 250,000 tons sugar, they added. "After great efforts the ministry of finance has release Rs 10 billion of subsidy, which has been directly paid to the banks against the credit limit utilised by the TCP," said Anjum Bashir, chairman of TCP.
He expressed hope that remaining amount, which has been calculated to about Rs 23 billion, would also release shortly by the ministry. The Chairman said that TCP has also recovered long pending Rs 3.5 billion from Utility Stores Corporation and other government institution and on daily basis pending amount is being received from different institutions.
TCP has almost has come out of severe financial crisis and now is in a position to open other letters of credit for urea also, he said, adding "TCP has successfully established two sugar import LCs, while first urea import LC is likely to be opened in the next few days,".
He said that a five-bank consortium is supporting the Corporation. However, due to some legal complications, they are bound not to giver extraordinary favour to the corporation. "Physical delivery of sugar and urea will start in the third week of this month, and we are confident that sugar and urea operation would be successfully completed by the TCP with the help of other government departments," the chairman said.