Govt to Revise Payment Mechanism for TCP Imports As Food Circular Debt Crosses Rs. 259 Billion

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The federal government has decided to modify the payment mechanism for commodities, including urea, sugar, and wheat, imported by the Trading Corporation of Pakistan (TCP).

The move comes as the circular debt in the stock has surpassed Rs. 259 billion, with $0.6 million payable as interest to banks.

The development was revealed at the Senate Standing Committee on Commerce chaired by Senator Zeeshan Khanzada, Chairman TCP, Syed Rafeo Bashir Shah.

The Chairman noted that the current circular debt comprises a total principal amount of Rs. 105.5 billion against 13 entities/governments.

The cumulative mark-up amount stands at Rs. 153.75 billion, reaching a total of Rs. 259.257 billion as of November 30, 2023.

The government has decided to shift the payment mechanism, with a meeting in the Finance Ministry directing concerned departments and governments to make partial payments of principal liabilities.

Failure to comply may result in deductions through the federal adjuster. The move aims to alleviate the rising circular debt, which is a matter of growing concern.

TCP proposed a paradigm shift in public and private sector perceptions regarding its operations.

The focus is on reducing liabilities without accruing further debt, allowing TCP to function as an active and profitable State-Owned Enterprise (SOE). However, decisions on certain amounts are pending.

The committee stressed the need for a prompt resolution to this issue, cautioning that the mark-up amount could reach Rs. 200 billion by the year-end.

Meanwhile, concerns were raised about transparency and the involvement of law enforcement agencies in corporate agriculture projects.

In another development, the Commerce Ministry opposed a proposal for a blanket ban on the export of raw salt, citing potential issues as a member of the WTO.

The committee decided to defer the matter and requested an amended draft for future deliberation.

The meeting also addressed the duty-free import of cars for disabled persons, with recommendations to allow the import of used cars up to 1500cc once in 5 years. The Committee directed the ministry to furnish a progress report on this matter within one month.

Additionally, discussions were held on measures to enhance Kinnow exports, with a focus on diversifying export destinations and increasing awareness domestically.

Deputy Chairman Senate Mirza Muhammad Afridi, Senator Fida Muhammad, Senator Saleem Mandviwalla, Senator Danesh Kumar, Senator Palwasha Muhammad Zai Khan, and Senator Mohammad Abdul Qadir attended the meeting.

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