20000115

Aptma willing

to buy TCP cotton

stocks at cost

plus expenses

RECORDER REPORT

KARACHI: The All Pakistan Textile Mills Association (Aptma) has asked the government to allow the local mills to compete with exporters in the tender for sale of cotton by the Trading Corporation of Pakistan and have also expressed the willingness to buy TCP stock at cost plus expenses.

This offer was made to Federal Finance Minister Shaukat Aziz by Aptma Chairman Humayun Ellahi Sheikh in the meeting in Islamabad. Final decision on the subject will be taken upon the return of Federal Commerce Minister, Abdul Razak Dawood from Europe.

The TCP has bought 464,450 bales of cotton by the end of last year. And, it has been allowed to procure up to a million bales to keep the prices stable in the local market and protect the growers.

The Aptma estimates that the cotton crop would be around 10 million bales. And, it expects the local mill demand to be around 9.2 million as against 8.6 million bales. The increase in cotton consumption is due increased capacity utilisation in the textile industry due to reasonable cotton prices and also due to higher prices of polyester.

In totality, says Aptma, a production of 10 million bales with a cotton consumption 9.2 million bales, leaves a surplus of only 0.8 million bales against which export contracts of 372,420 bales have been registered while the TCP has bought 464,450 bales by the end of last year.

The Aptma emphasised that the TCP should be refrained from selling cotton in the international market at desperately low prices, which could result in a loss to the government of around Rs 5 billion and provide undue advantage to overseas competitors.

By restricting the sale of the TCP stocks to local industry at cost plus expenses not only would the government pay back the banks who have lent to the TCP but also obtain value addition through yarn export over subsidised raw cotton exports.