The Trading Corporation of Pakistan (TCP) on Saturday finalised deals for the procurement of 200,000 tons of sugar at Rs 46,250 per ton from local sugar mills.

Some 43 other bidders have also agreed to match the lowest price and supply a cumulative quantity of 350,000 tons, sources told Business Recorder.

Following the directives of the Economic Coordination Committee (ECC) of the Cabinet, the state-run grain trader on Dec 15, 2011 scrapped second sugar procurement tender and invited fresh bids for the purchase of 200,000 tons of sugar from local mills to help them make payment to growers.

The third sugar purchase tender was opened on Friday and TCP received some 56 bids for the supply of 441,000 tons as against the tender of 200,000 tons of crystal sugar supply from local sugar mills. The lowest offered price was Rs 46,250 per ton while the highest bid was Rs 50,350 per ton.

Source said that two bidders, namely Hussain Sugar Mill and Sheikho Sugar Mills, quoted the lowest bid of Rs 46,250 per ton for the supply of 200,000 tons of sugar.

TCP had accepted these bids and offered other bidders to match the lowest price as the ECC of the Cabinet had already given a free hand to the TCP to assess the reasonability of sugar price offered by the sugar mills in response to the tender opened on Dec 23, 2011.

In response TCP’s offer, out of remaining 54 bidders, some 43 have also shown interest to supply a cumulative quantity of 350,000 tons at Rs 46,250 per ton.

The TCP will take a final decision on the offers of these parties on Monday. Meanwhile, a letter of acceptance has been issued to the first two lowest bidders for the purchase of 200,000 tons of sugar.

Sources said that procured sugar would be supplied to Utility Stores Corporation (USC).

“As you are aware, bid offers against the 200,000 tons tender notice were received and opened today. Two bidders have quoted Rs 46,250 per ton for a total quantity of 200,000 tons.

In order to complete the targeted procurement, it is being considered to ascertain from the bidders (other than the bidders who offered the lowest price) if they would like to match the lowest bid/price of Rs 46,250 per ton for the quantity they could offer at the said price,” sources quoted TCP as saying in a letter sent to all bidders, a copy of which is available with Business Recorder.

The offer, consent of the bidders will be as follows: (i) the offer of price matching will be valid up to January 3, 2012; (ii) TCP reserves the right to accept or reject the offer for price matching or to reduce the quantity offered by the bidder; and (iii) all other terms and conditions of tender remain unchanged.

According to the letter, each sugar miller may respond whether he agrees to match the lowest bid of Rs 46,250 per ton, and communicate it to TCP in writing, indicating the quantity it can offer. The offer deadline was Saturday December 24, 2011.

PSMA Chairman Javed Kayani had urged the government that out of the total 441,000 tons offered, buying and securing the maximum quantity by asking the bidders to match the lowest price of 46.25 per kg should be considered.

One of the bidders told this scribe that they are facing the worst ever time in sugar business due to massive decline in prices.

Official documents show that the Ministry of Industries had proposed to the government to purchase sugar from mills at Rs 63 per kg, but the Economic Coordination Committee (ECC) of the Cabinet rejected the proposal, saying that it would become a scandal at that purchase price.

It may also be mentioned here that in the second sugar purchase tender, opened on November 12, 2011, as many as 32 parties showed their interest to sell sugar stocks to the state-run grain trader.

However, all the 32 mills offered the bids for varying quantities at rates ranging from Rs 65,000 to Rs 66,000 per ton, which were much higher than the prevailing market prices.