Date:10/05/2006 URL: http://www.thehindubusinessline.com/2006/05/10/stories/2006051003500800.htm

Back Suppliers flay STC wheat tender

G. Chandrashekhar

Mumbai , May 9

Terms and conditions of the new STC tender for import of three million tonnes of wheat have raised the backless of potential participants. The terms are widely seen as onerous and intended to keep many participants at bay.

There is also apprehension that the country would end up paying a higher price, as overseas suppliers are secure in the knowledge that India requirement is indeed massive.

Several representative companies of overseas suppliers this correspondent spoke to are unanimous in their opinion that it is rather native on STC's part to have floated a tender for the whole of three million tonnes. They assert the quantity should have been spaced out. Almost all of them sought anonymity while making comments.

Timing questioned

Some are critical of the timing of the tender itself and believe this is not the opportune time for India. With wheat harvest in the country in full swing, it makes little sense floating a tender for import.

Also, the next major crop of wheat in the northern hemisphere will be out in August/September. Depending on crop conditions, global wheat prices may ease a little then and India may be able to obtain lower rates. In particular, European suppliers are likely to feel the pinch at this point of time.

The conditions attached to the tender process are also seen as impractical. The bid bond requirement of $3 million as per item 10 and performance bank guarantee ten per cent as per item 11 may have to be eased considerably.

Criticism against quality specifications has been rampant. Some suppliers pointed out that wheat is usually traded on 14 per cent (maximum) moisture basis. STC's specifications are lower. Fumigation with methyl bromide is another condition that it has been found not feasible, as many exporting countries have stopped using this. Loading and discharge rates specified are also said to be out of sync with trade norms.

One classic comment that came from a trading house in the Far-East just summed up the mood. He said STC tender will make India a laughing stock of the global grain market.

Strong case for OGL

There is strong case for placing what imports under open general licence. The move will have an immediate impact on domestic prices. The designs of those building inventor with speculative inte4nsions can be defeated.

There is no reason why such large imports should be routed through a state-trading agency, which is inherently less, efficient and whose operations are less transparent. There already whispers or allegations of kickback in the last STC purchase.

The government should be able to monitor OGL imports and take action as ans when the desired quantity of import is reached. The private sector will be able to buy what at lower price and distribute it more efficiently.