New plan to send sugar to Pakistan

Chennai: The sugar industry is working out an alternative plan to overcome the hurdles posed by lack of railway wagons in exporting the commodity to Pakistan. "Thealternative plan could be time-consuming," industry sources said, without providing further details.

While Pakistan is looking to import a good quantity of sugar to keep its domestic prices on leash, Indian exporters are faced with lack of railway wagons to export it.

Industry sources said a solution to the problem was unlikely in the short-term. "We don't think a quick solution is possible immediately," they said. One of the alternatives that the industry could be toying is sending the consignments by road. "Shipping sugar cargo could cost an additional $25-30 a tonne," the sources said.

Meanwhile, reports from Pakistan say Indian exporters are cancelling contracts in view of rising prices in the global market. Industry sources said the cancellation could have been done by traders, who were finding exports a losing proposition in the face of rising prices. When contacted, Mr S.L. Jain, Director-General, said no sugar mill had cancelled any export contract to Pakistan. Traders had contracted to sell at $440-450 a tonne for delivery in Pakistan a couple of weeks ago but with the prices rising to $490, they are finding it difficult. On Thursday, spot prices in London were $460.50 a tonne f.o.b ($446 on Wednesday).

Indian mills will later this week bid for a 50,000-tonne tender from Pakistan to buy sugar. The Indian Sugar Exim Corporation (ISEC), a trading arm of both private and cooperative millers in the country, could be bidding for sourcing the entire quantity.

Mills supplying to ISEC will be helped to fulfil their export obligations, according to Mr Jain. On Pakistan's failure to buy sugar last year despite lifting a four-year-old ban, Mr Jain said India was then in the negative list of the Trading Corporation of Pakistan, which has floated the current tender.

"The current tender is India specific and TCP has placed India in the positive list of supplier following our efforts," he said, adding that ISEC would bid to supply the entire 50,000 tonnes demand.

-M.R. Subramani
Hindu Business Line
February 24, 2006