By Staff Reporter
ISLAMABAD: Pakistan has secured Letters of Credit through Azerbaijan’s state-owned SOCAR for the import of 85,000 metric tons of sugar, a move designed to avert shortages and rein in retail prices that have soared past 200 rupees per kilogram.
The Federal Ministry of Food Security announced the deal on Friday, emphasising its role in stabilising a market plagued by supply constraints and public outcry over food inflation. “In order to meet the demand for sugar in the country and stabilise prices, Letters of Credit (LCs) have been established through SOCAR for the import of 85,000 metric tons of sugar,” the ministry said in a release. “All these LCs have been formally opened and disbursed through the relevant banks and this consignment of sugar will be delivered to Pakistan in phases under the trade agreement signed with SOCAR.”
The SOCAR arrangement comes alongside broader procurement efforts by the state-owned Trading Corporation of Pakistan (TCP), which launched an international tender on Thursday for 200,000 metric tons of white refined sugar. Bids for fine, small, and medium-grade sugar are due by August 21, with shipments required by October 31.
This follows a tender that closed this week, where TCP procured about 55,000 tons from offers up to 100,000 tons, trade sources said. In that round, TCP purchased 30,000 tons of medium-grade sugar from Dubai-based Al Khaleej Sugar at $586 per ton, cost and freight included, and 25,000 tons of fine-grade sugar from Swiss trading house Louis Dreyfus Co. at around $580 per ton. Traders noted another bidder has been asked to revise its offer, with a potential additional award by week’s end. Shipments from the prior tender are scheduled for September: 50,000 tons of breakbulk between September 1 and 15, the remainder from September 10 to 25. Container shipments are set for September 1 to 20, with all arrivals by October 20.
The imports address a volatile sugar market where retail prices exceed the government’s 173-rupee cap and 165-rupee ex-mill limit, amplifying discontent over rising food costs. Pakistan’s 2024-25 crushing season produced 5.8 million metric tons, below the 7 million-ton projection due to erratic weather, against 6.3 million tons of domestic demand. This prompted a halt to exports in January 2025, after 750,000 tons were shipped last year for $402 million in revenue.
At the season’s outset, reserves stood at 800,000 tons with a 1.3 million-ton surplus. Exports lowered retail prices from 138 rupees per kg to 119 rupees starting in October 2024. But reduced output tightened supplies, driving prices up. As of April 30, stocks totalled 6.3 million tons, including a 0.5 million-ton buffer, enough for annual consumption. Current reserves of 2 million tons suffice for three months, yet prices rise, blamed by the government on market manipulation.
TCP’s recent tenders have had varied success. A July bid for 50,000 tons drew no offers, while a July 31 tender for 100,000 tons failed over high prices. On July 8, the government approved 500,000 tons of imports to boost supplies and curb hikes. The SOCAR deal, with phased deliveries, represents a targeted response to these dynamics, though elevated global prices—as seen in the $580-$586 per-ton rates—add complexity.
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