ECC agrees to sell old PASSCO wheat stock | The Express Tribune

ISLAMABAD:

The government has decided to clear liabilities of banks and employees of the Pakistan Agricultural Storage and Services Corporation (Passco) by disposing of the old stored wheat through competitive bidding.

Passco has been holding stocks of imported wheat since 2022 and paying billions of rupees in interest costs.

During discussions in a recent meeting of the Economic Coordination Committee (ECC), the Ministry of National Food Security & Research explained the background of the case and the factors behind the decision to go for competitive bidding for the sale of wheat stock.

These factors included prevailing prices of local wheat in the market, probable escalation in prices, quality and aging of imported wheat, cost of storage, reluctance of buyers and the Passco winding-up process.

It was highlighted that the expected date for the award of a contract would be February 15, with the lifting of wheat by March 15, once the decision was finalised. The food security ministry and Passco held a series of meetings and consultations to determine the reserve price while taking into account all the relevant factors.

The ECC was told that wheat prices had risen by Rs100 per 40 kg in recent days and the increase may be added to the proposed reserve price for local wheat. Accordingly, they recommended the price of Rs4,400 per 40 kg for local wheat and Rs4,070 for imported wheat.

The committee inquired about the disposal plan for the remaining stock, responding to which the food ministry explained that it would be decided based on the level of success in the auction, market prices at that time and potential of new crop. The ECC agreed to review the situation by the end of February. It recommended that proceeds of the auction should be used to cover the employee severance package and pay off bank liabilities.

The ECC considered the summary submitted by the Ministry of National Food Security regarding the disposal of 500,000 metric tons (±15% as per PPRA rules) of Passco wheat stock through competitive bidding and approved the proposal with the stipulation that the reserve price per 40 kg of local wheat shall be Rs4,450 and the price of imported wheat shall be Rs4,070 with efforts to fetch maximum prices.

The ECC directed the ministry to share progress and updates on the situation by the end of February. It also decided to clear liabilities of banks and employees of Passco.

Passco revealed that as of April 1, 2025, it was holding 2.448 million metric tons of wheat. Of this stock, Azad Jammu & Kashmir had been allocated 300,000 metric tons and Gilgit-Baltistan 160,000 metric tons, leaving 1.988 million tons for disposal.

At present, Passco is bearing a heavy financial burden on account of bank mark-up, storage and handling costs, compounded by slow lifting of allocated wheat by government agencies. Owing to very low demand from agencies, the Passco board recommended the disposal of wheat stock through open competitive bidding as a viable option in its 155th meeting held on August 11, 2025.

Keeping in view the prevailing market conditions, the ECC was apprised by the Ministry of National Food Security that because of the aging imported stock and the need to avoid market distortion, the Passco board of directors, in its 160th meeting held on December 5, 2025, approved the disposal of 500,000 metric tons of wheat (imported and local) on a First-In-First-Out (FIFO) basis through open competitive bidding. The proposed quantity comprised 294,994 tons of imported wheat (2022 lot) and 250,006 tons of local wheat.

The food ministry said that on January 2, 2026, Passco management proposed a reserve price of Rs3,400-3,500 per 40 kg for local wheat and Rs3,200-3,300 for imported wheat. These prices were based on prevailing market rates at that time.

However, prices rose in the local market from January 8 to 15. Consequently, the ministry constituted a committee for fresh determination of reserve prices. The committee met on January 16 and after detailed deliberations and consideration of all relevant factors, it recommended indicative reserve prices ranging from Rs4,180 to Rs4,290 per 40 kg for local wheat and from Rs3,900 to Rs4,070 for imported wheat (inclusive of taxes).

Based on these prices, the estimated financial loss from the disposal of 500,000 tons ranged from Rs13 billion to Rs22.11 billion. Separately, the annual carrying cost of the proposed quantity was estimated at over Rs11 billion.

The food ministry apprised the ECC that disposal of the proposed quantity through open auction would help to reduce the fiscal burden on the government, minimise losses from the old imported wheat, slash carrying costs, stabilise market prices and ensure that benefits of subsidised wheat were reaped by domestic consumers. It would also facilitate smooth implementation of the federal cabinet’s decision on winding up Passco.

It was pointed out that the imported wheat stock of 2022 was gradually losing market value compared to fresh arrivals, a trend that would further intensify if the stock was kept unsold for a longer period.