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Pakistan:Government looses Rs 1b over cotton stocks carried by TCP |
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2005-4-11
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The cost of carrying 1.6 million cotton bales purchased by the government run Trading Corporation of Pakistan would lead to the government suffering almost Rs 1 billion loss in terms during last seven months, which are likely to be offered to local mills and exporters.
As part of market intervention, TCP had been purchasing cotton from markets to support the cotton growers and traders while maintaining the prices at Rs 925 per bale. Officials said the government, which spent Rs 16 billion for the purchase of 1.6 million bales from the local market through Trading Corporation of Pakistan, had lost Rs 910 million since September when its started lifting commodity.
“The TCP purchased cotton at Rs 2,159 per maund,” said an official. “It contracted deals for 1.6 million and spent Rs 16 billion and by each passing day with the idle stock of cotton it pays more and more.”
But, the Government is yet to decide whether to sell the stocks or not which has caused the losses. The decision if taken could partially compensate for the losses when cotton is sold to local mills alongwith export.
“Out of contracted 1.6 million bales quantity of 1.576 million bales have reached in TCP warehouses,” he said. “This is divided as the corporation stocked 1.417 million bales in its warehouse in Karachi and it stored remaining 159,300 in seven private warehouses of Punjab and Sindh.”
“The ECC may also fix per maund price of the commodity for the local sales,” said the official. “But it depends on the recommendations of the industry and commerce ministries that whether they support the fixed price or prefer market-based mechanism for the local sales of the bales.”
Out of total 1.6 million bales the TCP succeeded to export only 30,000 bales on lower prices. The TCP floated two tenders in December last for the export of the commodity and received highest bid of 41.77 cents per pound for the first while the second one ended at 40.15 cents per pound. |
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