NEW DELHI, May 29: The State Trading Corporation (STC) appears to have been caught on the wrong foot while attempting to re-enter the sugar exports market after a period of several years.STC, which won the contract to export 25,000 tonnes to the Trading Corporation of Pakistan (TCP) by bidding $ 10 per tonne less than the ISIGEIC price of $ 360 per tonne, managed to supply a mere 3,650 tonnes. As a result, TCP has witheld payment of $ 2,50,000 (from the total of $ 12,750,000) as damages for late delivery.While labelling the TCP decision arbitrary, STC has decided to approach the Refined Sugar Federation in London for arbitration in the matter.

STC's argument is that it's contract stated that it would export the sugar depending on the availability of rakes from the railways. Since it was unable to get enough rakes, it could not deliver the promised amounts.STC had bagged a contract for the supply of 25,000 tonnes of sugar by rail to Pakistan by January 11, 1997. The deadline was later extended to January 22 at a nominal penalty charge.``TCP has arbitrarily interpreted the contract and not made full payment for the sugar supplied to it,'' STC officials said. STC sources also allege that the original contract clearly stated that the supplies would be made subject to availability of rakes and their approval by Pakistani customs authorities. They say since only two rakes were available by January 19, the supplies were delayed.

Sugar exports have been through a see-saw of fortunes over the last six months since the government repealed the Sugar Export Promotion Act of 1958 and decanalised sugar exports through an ordinance promulagated on January 15. Since then there have been two sessions of Parliament which have failed to pass the ordinance and sugar exports have come to a virtual standstill.In the post-decanalisation period, the government has made the Agricultural and Processed Foods Export Development Authority (APEDA) the sole canalising agency through which sugar exports are to be routed. The APEDA recently floated a tender for 1.5 lakh tonnes of sugar for export which received a disheartening response of 10,000 tonnes. Its earlier tender for export of 2.5 lakh tonnes of sugar had received orders for 92,000 tonnes of which less than 15 % have been executed.The sugar industry has been demanding that if the ordinance for decanalising sugar exports has failed to find support in Parliament, the government needs to either revert to the original export act or issue fresh guidelines rather than expecting the industry to function in a ``vacuum''.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.