The Hindu Business Line : STC rules out change in wheat tender

Pandalai speak
The Feb 20 is a closed chapter and no change in norms.
The organisation will wait till month-end to know about delivery.
Centre can invoke the penalty clause.

New Delhi , May 22

State Trading Corporation of India Ltd (STC) has ruled out any retrospective changes in the terms of its February 20 tender for import of five lakh tonnes (lt) of wheat, awarded to AWB Ltd of Australia.

This may impact the arrival of more than four lt of the contracted quantity that Australia's monopoly wheat export body is yet to supply.

TENDER NORM

The February 20 tender had specified that the imported wheat be `completely free' from ergot (Cleviceps purpurea) and dwarf bunt (Tilletia controversa).

Following pressure from overseas exporters, STC's subsequent tender of May 8 for import of 30 lt had allowed the presence of these two fungal pathogens up to 0.01 per cent and 0.005 per cent by weight respectively.

AWB has so far delivered only about 92,000 tonnes of the original five lt order, for which it had successfully bid at $178.75 a tonne, c.i.f.

IN LIMBO

The remaining four lt plus wheat is in limbo, with AWB apparently finding it difficult to supply wheat that is totally ergot-free.

As a result, it has diverted cargo originally meant for India to other destinations, while reportedly demanding that the 0.01 per cent allowance for ergot in the May 8 tender be made effective retrospectively.

`Closed chapter'

"There is no way we can allow it. The two tenders are separate and no terms of the first tender can be changed. It is a closed chapter," said the STC Chairman, Mr Arvind Pandalai, on the sidelines of a function to commemorate the golden jubilee of the country's premier official trading agency.

On AWB not delivering the entire five lt, despite the original tender stipulating that the arrivals be completed before mid-May, Mr Pandalai said: "We will wait till the end of this month. In the event of default, there are international clauses like penalties."

The tender provides for cashing a performance bank guarantee equivalent to five per cent of the contract value. The guarantee is valid up to May 31.

Sources said the Government was caught in a bind, as STC's second tender has attracted lukewarm response from eight parties, none of whom have bid for the entire 30 lt. The eight of them put together have bid for around 26 lt, with AWB once again offering to purchase the maximum quantity of 12 lt at $210 a tonne c.i.f. and $175 f.o.b.

Helpless?

"In the normal course, defaulting parties would not have been permitted to bid. But in this case, the Government probably cannot afford to blacklist anybody, given that it needs to import at least 50-60 lt of wheat for its buffer stocks," they said.

To make matters messier, AWB is also in the news for illegal payments of $2.5 million allegedly made by it for 20 lt of wheat imports contracted by the United Front Government under Mr I.K. Gujral in February 1998.