KARACHI – Cash-strapped governments of Punjab and Sindh, exporting millions of tonnes of excess wheat through the private sector to fulfill their budgetary needs, have announced a subsidy of Rs 600 per tonne on expedited exports of the commodity.
The conditional subsidy would, however, be given on those consignments that would have been dispatched before April 30, 2011, eve of the next wheat procurement season. If calculated on the basis of given initial export target of three million tonnes, the subsidy will cost the fiscal deficit-hit provincial governments at least Rs 1.8 billion.
Sources told Pakistan Today that, while the next wheat procurement season is imminent, the two provinces do not have money to repay billions of rupees borrowed from banks for buying wheat during the current season. Furthermore, the two provinces were also falling short of storage facilities where millions of tonnes of wheat were still awaiting to be sold out.
“The provincial governments have had their (bank) borrowing limits full and, to seek more loans, they would first have to clear previous credits,” sources said. They added that, given a large quantity of unsold wheat, provincial governments were unable to repay bank loans. Sources claimed that the two governments did not have space in their warehouses to store wheat, which is to be procured during the forthcoming season.
“They want their existing wheat reserves to be sold out primarily through exports at the earliest,” they added. According to sources, provincial governments had initially intended to export three million tonnes of wheat. However, since January, private exporters were able to dispatch around 600 tonnes only, sources claimed.
“Supply of exportable wheat from the two provinces is very slow,” said an official of a stevedoring firm privy to exports. He claimed that the Punjab government had appeared unable to move more than 1000 tonnes of wheat per day. “They should ensure a daily supply of 4000 tonnes,” the official said. Supplies from Sindh were also not “up to the mark”, sources said, adding that ships were awaiting cargo at the country’s seaports for weeks, in some cases.
“Fateh Rehman remained anchored at Karachi Port for weeks due to shortage of wheat supply,” sources said. According to sources, excess provincial wheat was being exported through Karachi Port and Port Qasim, at a dedicated grain terminal operated by Fauji Akbar Portia and Marginal Wharf.
