KARACHI: The Trading Corporation of Pakistan (TCP) has served final notice on the international supplier namely Global Energy and Commodities Exchange (GECE) for the shipment of 50,000 tons of urea till April 20, 2012.
Sources told Business Recorder on Friday that urea shipment is being delayed by an international supplier, which has failed to supply 50,000 tons of urea as per commitment with the TCP and despite one and half months' grace period.
The shipment of cargo is still not confirmed. The TCP has decided to cancel the deal with GECE if cargo loading and inspection is not confirmed by Pre Shipment Inspection Agent (PSIA) in the second week of April and the supplier fails to start shipment till 20th of April. Following the directives of the federal government, TCP is engaged in importing urea to fill the supply and demand gap in the domestic market.
Under the second phase of urea import, TCP finalised deals for the import of some 0.5 million tons of urea through auction with pre-qualified bidders. A deal for the import of 50,000 tons of urea was finalised with GECE (local agent Green House), which participated in TCP's urea import bid and agreed to supply urea at $431 per ton with expected delivery in third week of February 2012. As per the tender's terms and conditions, after finalising the deal, all successful bidders are required to submit their shipment plan with the corporation to ensure timely supply of the commodity. Accordingly, the GECE also submitted a shipping schedule according to which, Mv DENIZ-M will start loading from Jebel Ali Port of UAE as on February 17, 2012. However, the supplier failed to make shipment as per schedule and requested TCP for relaxation in supply period.
TCP, imposing a plenty of 25 cents per ton per day, granted an extension of 20 days and allowed the GECE to make shipment of 50,000 tons of urea till March 6, 2012 positively. Later, again the supplier failed to make supply as per second schedule and for the third time GECE assured the TCP management that urea will be delivered by March 20, 2012.
However, this time the supplier changed the port and vessel name, previously one bulky ship was nominated for the complete supply of commodity and Jebel Ali Port of UAE was mentioned as loading port. While, as per third scheduled of GECE, urea will be supplied from Odessa port of Ukraine. Sources said the continuous extension in the supply deadline invites concerns for TCP, which is making efforts to get the shipment from the same supplier as urea prices in the international market are now at higher level and re-tendering will make financial burden on the exchequer.
Despite, getting one and half months extension, the international supplier has failed to supply urea as per commitment, therefore a plenty of 35 cents per ton per day has been imposed on the bidder. TCP has also given final deadline to the international supplier to ensure the inspection of urea through PSIA till April 10, 2012, which will prove that the supplier is sincerely willing to supply the commodity to Pakistan. After the inspection, shipment should start till April 20, 2012, sources said.
"Serving the final notice, TCP decided in principle that if GECE fails to start shipment till 20th of April, the deal will be cancelled and an amount of some Rs 107 million of performance-guarantee, already deposited with state run grain trader, will be withheld," they added. There may be two reasons for failure of shipment - rising prices of urea in the international market and secondly the supplier doesn't have urea in stock, market sources said.
TCP is making full efforts to ensure supply under the already signed contract as if the delivery was not matured, TCP will be required to issue another tender for the procurement of 50,000 tons of urea, they said and added that any further delay in the import of urea will result in huge financial losses to exchequer as presently prices of urea are on upward side in international market. Since the re-tender process will take almost one month, therefore, TCP is trying to complete procurement through already signed contracts, they added.