The Trading Corporation of Pakistan (TCP) has annulled 100,000 tons sugar contract with M/s Yunan Coal Chemical Industry Group Co Limited, represented in Pakistan by the son-in-law of a former Secretary Defence and a close relative of Prime Minister, Syed Yousuf Raza Gilani, informed sources and market players told Business Recorder.
The TCP, in an official statement, revealed that the contract was awarded to the lowest bidder after exercising due diligence and strict adherence to the PPRA rules. The firm deposited performance guarantee valued at $976,000 and was required to make the shipment within three weeks of the opening of L/C. The contract also stipulated that the seller could avail 10 days beyond three weeks on payment of penalty of $0.10 per day per ton. The firm after availing this period, which expired midnight of July 16, 2010 has still not honoured the contract terms.
After cancellation of the contract, the TCP will now sequestrate $976,000 of M/s Yunan, which was deposited by the firm as performance bond. The contract of M/s Sadat Business Group Limited Dubai of Peshawar-based Dr Ajmal has also not been honoured. The shipment schedule of 50,000 tons of white sugar by the prescribed date of July 16, 2010 has been give an extension of almost two weeks by a commerce ministry officer stationed in Pakistan embassy in Brazil who stated in a letter, after reportedly receiving verbal instructions from Islamabad that the shipment is delayed due to port congestion.
In an emergency meeting of the executive committee of the Board of Directors of the TCP, held on Saturday presided by TCP Chairman S Anjum Bashir, an extension has been granted based on the letter from Pakistan's Commercial Counsellor in Brazil stating that the delay is due to port congestion.
The TCP Chairman wrote a letter to the Commercial Counsellor dated July 13, 2010 (a copy of which is available with this scribe) saying "We wish to inform you that one of the suppliers M/s Sadat Business Group, Limited, Dubai were awarded a contract for the supply of 50,000 tons of sugar. The supplier has made arrangement for supply of 50,000 tons sugar from port Santos. The pre-inspection company, M/s NMCI Group Brazil, (Jessica Canever), have informed that the supplier has offered the sugar stocks for inspection in Brazil likely to commence today. I shall be grateful, if you could depute someone to ascertain whether the physical inspection of the sugar stock has actually started by the pre-shipment inspection company."
However, the following day, July 14, 2010, the TCP Chairman wrote a letter to Secretary Commerce stating that the two contracts - one awarded to Chinese firm, M/s Yunan Coal Chemical Industry Group Limited for 100,000 tons and another to M/s Sadat Business Group Limited, Dubai for 50,000 tons, are in progress but the shipment has not started. He added that both the parties as per tender terms are required to make part shipment by July 16, 2010 and these have been confirmed by the respective parties; but the market feedback does not support this claim.
When contacted, the TCP Chairman however insisted that he "has taken the decision based on facts available and the report of the PSI. If the ship is not nominated by July 22, this contract (with M/s Sadat) would be cancelled." The TCP press release states that the contract with M/s Sadat Business Group Ltd, Dubai for 50,000 MT will expire on July18, 2010 as the bank took two additional days for processing of L/C.
The firm has requested for an extension up to 30th July, 2010 due to serious port congestion at Santos, Brazil. The Pre-shipment Company (NMCI) has confirmed that sugar is available but could not be delivered due to bad weather in Brazil. Pakistan Embassy in Brazil has also confirmed the same. Interestingly, the pre-shipment firm wrote this letter on July 10, 2010 and the chairman reiterated on July 14 that he would scrap the contract.
The sources said this letter was received by the Commercial Counsellor in Brazil. The port congestion has been confirmed by Pakistan embassy in Brazil and according to press reports from Brazil, shipment may be delayed by about 10 days. However, neither of the parties have requested for any extension in this regard.