ECC approves 180,000 tons of wheat import from Russia

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Friday approved the import of 180,000 tons of wheat from Russia under a government-to-government arrangement.

The ECC also waived off all taxes, levies and duties on wheat import during a meeting presided over by Adviser to the Prime Minister on Finance and Revenue Hafeez Shaikh.

The meeting was informed that the private sector had already imported 430,000 tons of wheat and another 1.1 million ton was expected to be imported by the end of December. Besides, the Trading Corporation of Pakistan (TCP) has opened a letter of credit to import 330,000 tons of wheat and is in the process of tendering another about 1.2 million tons.

It was told that around five million tons of wheat is available with the public sector in stocks. The country has so far imported 400,000 tons of wheat as a gap in demand and supply is causing shortage of the staple in the country.

The government is working on three ways to meet an estimated 2.2 million tons of shortfall this year. Private sector, TCP and government-to-government deals are encouraged. Private sector was allowed to import wheat for an unlimited period.

Regulatory duty of 60 percent, customs duty of 11 percent, sales tax of 17 percent and withholding tax of six percent were abolished on the import. Imported wheat has also been exempted from the Anti-Hoarding Act imposed by the provincial governments on producing verified import records by the importers.

The fears also exist that the increased import might flood the domestic market then it might be smuggled out so all relevant ministries and departments would have to show vigilance to avoid exploiting this complex and tricky situation.

One official said this situation can only arise when the imported wheat will cross the 1.5 million tons mark and so it has not yet touched one million tons by both the public and private sectors.

In July, the ECC explored the option of government to government import of wheat from all countries especially from Central Asian States and Iran. The ministry of food security and research sent out official communication to Ukraine, Russian Federation and Iran to find out the possibility of importing wheat of a minimum quantity of 200,000 tons. Russia showed interest in sending wheat to Pakistan.

Russia selected state-owned firms namely United Grain Company and Prodintorg for making arrangements. The government selected Pakistan Agricultural Storage and Services Corporation (Passco) and both the sides started negotiation and finalised it in the light of exchanged wheat specification and other items.

The ministry of foreign affairs received a proposed memorandum of understanding that was also submitted to the cabinet for approval by the end of September. The Ministry of Agriculture of Russia informed that they were ready to provide 180,000 (plus-minus 10 percent) of milling wheat from October 15 to November 30. But they further informed that this proposal stands valid till 02-10-2020 at 18:00 hours Pakistan Standard Time.

Food security ministry evaluated the proposal in detail and is of the opinion that due to fluctuating pricing in the international market and domestic demand and supply situation, the prices offered from Russian side at $279/ ton equivalent to Rs46,116 are reasonable. This quantity of 180,000 will be used to replenish the strategic reserves of Passco.

Keeping in view, the ministry of food security and research recommended the import of 180,000 tons of wheat from Russia at a rate of $279/ton. The entire cost for importing would be at a rate of $50 million or Rs8.3 billion.

The ECC also allowed an amendment of statutory regulatory order (SRO 751(1)/2020) made in August to exempt supply of up to 300,000 tons of sugar imported through TCP.