Govt suffers Rs 20 million loss on sale of Soybean oil

LAHORE-Trading Corporation of Pakistan (TCP) has auctioned last week its 8,000 metric tones (Mts) of imported American Soybean oil to the domestic Vanaspati Ghee and edible oil processing industry at a heavily subsidized prices, industry sources said here on Tuesday. During the first auction, government has suffered at least Rs 20 million.

All the 39 lots weighing 12,500 Mts, which have landed in the country so far from the United States against the withheld money of F-16 fighter jets, were offered for the auctioning to 41 representatives of different industries, who had registered themselves with the TCP’s auctioning body before this bidding. However, only 27 could attract the suitable buyers, while 12 stay with the TCP for the next auctioning.

The buyers of these lots have been offered all the tax exemptions (including sales tax and advance income tax) which made these offers more lucrative for an industry which was paying 15 per cent Sales Tax along with five per cent advance income tax for their landed lots in the country.

According to the price estimation formula, which the Vanaspati Industry has filed with the Ministry of Industries and Commerce, the landed cost of Soybean despite a recent reduction the duty was not less than Rs 42,600 per Mt Karachi. While these 27 lots were sold at Rs 38,870 per Mts, which implied that, they received a direct subsidy of at Rs 3,790 per metric tonne along with additional 20 per cent tax exemption.

A cartel like situation seemed to have been emerged when the participant bidders declined to make a call offer for the said commodity saying that the reserve price of Rs 40,956 per Mts, was quite high despite the fact that it was at least Rs 700 less than their existing market price. TCP announced two revised auction prices Rs 40,538 per Mt and Rs 39,702 per Mt. However, the response continued to be negative.

Then the head of the auctioning board, Abdul Malik, Director Imports TCP, consulted the Chairman TCP, who put his foot down and it was conveyed to the participants that if nobody interested in buying then the auctioning would be cancelled. Following this ‘threat’ the participants started bidding for the lots, which ended at Rs 38,870 per Mts.

Despite the sincere effort from the auctioning board, none of the participants bother to improve his bid.

Following was the parties and their purchase. United Ghee, Faisalabad, (250 + 250 = 500 Mts); Paracha Textile, Karachi, (250 + 250 = 500); Evian Oil Mills, Port Qasim, Karachi (250+250=500 Mts); Agro Processors, Karachi (250 + 250 = 500 Mts); Shakoo Oil, Karachi (250 Mts), Wazi Ali Industries (250 Mts), Hamza Vegetable, Karachi (250 Mts), M H Oil Mills, Karachi (250 Mts) Chaniot Enterprises, Karachi (250 Mts); Lever Brothers, Karachi (250+250+500 + 1,000= 2000 Mts), ACP, Islamabad (250 Mts) Burmah Oil Mills, Karachi (250 Mts); Waheed Hafeez Industries, Islamabad (250 Mts); Adeel Hamza Oil, Karachi (250 Mts); Farooq Motlani, Karachi ( 250 Mts); Latif Ghee Industries, Islamabad (250 Mts); Karm Ghee, Karachi (250 Mts); Hamza Vegetable, Lahore (250 + 250 = 500 Mts); Umer Bilal, Karachi (250 Mts); Hafeez Iqbal, Karachi (250 Mts); Spinzer Ghee Limited, Peshawar (250 Mts); Habib Oil Mills, Karachi (250+500=750 Mts).