BANGLADESH: ED&F Man offers lowest bid for 50,000 tonnes of whites

Published: 09/14/2017, 11:06:46 AM

London-based ED&F Man Sugar Limited has got the nod to supply 50,000 tonnes of refined sugar to the government, according to Bangladesh's Daily Star newspaper.

The cabinet committee on purchase gave the go-ahead to ED&F Man at a meeting Wednesday after the offer from the bidder became the lowest of the four.

The supplier offered sugar at US$470 per tonne.

And including 20% regulatory duty and expenses for import, the total cost of sugar to arrive at Chittagong port will be BDT 48,202 per tonne, according to the industries ministry.

"We want to import sugar so that dishonest traders cannot hike prices artificially as they are doing with rice prices," said AKM Delwer Hussain, chairman of state-run Bangladesh Sugar and Food Industries Corporation, earlier. 

The BSFIC, which runs 15 sugar mills where locally-grown sugarcane are crushed, imports the sweetener on behalf of the government to boost public stocks such that it can intervene in the market to curb price spiral.

The state corporation has now taken the initiative to import sugar by way of ED&F Man as it is currently sitting on scanty stocks.

It said it will have only 18,480 tonnes of sugar for public sales after distributing the sweetener to law enforcement agency personnel.

Besides, production at state mills might stand at 80,000 tonnes rather than the targeted 100,000 tonnes in the coming sugarcane crushing season owing to damage to four mills up north.

The BSFIC has the capacity to produce 210,000 tonnes of sugar a year but it cannot utilise the full capacity in the absence of adequate amounts of sugarcane.

"Increased stocks through imports will help us to keep prices stable," Hussain said on September 13.

To buy the sweeteners, the corporation under the industries ministry has invited bids from international suppliers and local refiners by the end of July this year. It received four bids, two of which were from local refiners.

Of them, offer from ED&F Man Sugar, submitted by Dhaka based Ria International Co. on behalf of ED&F Man, was the lowest, followed by local United Sugar Mills, City Sugar Industries Ltd and Singapore based M/S Agrocoorp International.

United Sugar Mills, which is a concern of commodity processor and marketer Meghna Group of Industries, quoted BDT 52,990 (US$650.7) each tonne and including additional expense the total purchase cost would be BDT53,144 per tonne.

This was BDT4,942 higher than the lowest bidder, according to the industries ministry document. City Group of Industries was the third lowest bidder to supply the sweetener.

The industries ministry said it will sell each kilogram of imported sugar by adding BDT1 as overhead cost with the purchase prices.

It means that the price of each kilogram of sugar will be BDT49.20, which would be less than BDT55-60 per kg recorded by the Trading Corporation of Bangladesh Wednesday.

Earlier, private refiners wanted the government to purchase sugar from them. But the BSFIC's Hussain said the bids from local refiners were higher.

In July, the industries ministry requested the National Board of Revenue to waive duty and value-added tax to import 100,000 tonnes of sugar and the revenue authority waived the duty accordingly.

Estimates on domestic sugar consumption vary.

According to the industries ministry the annual demand for sugar is 1.5 million tonnes, while the US Department of Agriculture estimates Bangladesh's annual consumption to be 2.340 million tonnes.

The majority of the domestic requirement for the sweetener is met through imports due to scanty domestic production of sugarcane.

The country can meet about 5% of its annual demand for sugar through state domestic production, meaning it has to spend more than BDT50 billion a year to import sugar to meet the annual demand.