Mauritius | Agro & Food

November 26, 2013

Strategic Sourcing: The Contract of 100,000 Tons of Flour Allocated to MLC

With the price obtained, the budget subsidies on the price of flour reduced Rs 160 million for next year

This weekend, the Cabinet of Ministers adopted three decisions on the supply of strategic commodities by the State Trading Corporation (STC). Thus, the green light was obtained for the allocation of the contract to supply 100,000 tonnes of flour - the contract value amounting to Rs 1.4 millird - on the local market Moulins de la Concorde (LMLC ) with a reduction of budget subsidies on the price of retail. On the other hand, the import contract 67,000 tons of cooking gas per year to September 2015 was won by Petredec Ltd and adjustments were made to the formula of the Petroleum Pricing Mechanism (PPM) to pass more quickly to consumers any decline in world oil prices.

Upon completion of the tender for flour, the lowest bid was submitted by an Indian company, Lall Mahal. But the results of the exercise of due diligence undertaken by the STC to determine the ability of this agent were by no means to the satisfaction of the Mauritian party. Not wanting to take any risks with a food staple, STC had sought the green light from the government to open negotiations with Les Moulins de la Concorde.

Mauritius The mill, which had participated in the tender had submitted above Lall Mahal quotes. Quoted by LMLC prices were $ 463 for the flour used in bakery and $ 469 for flour imported from Australia entering making faratas and other pastries. After negotiations initiated by the STC, LMLC reduced their price $ 461 per tonne for all types of flour. This uniform price is considered to benefit the consumer, which should not be a victim of "triangage" by traders in relation to the quality of the flour.

But the other major aspect of the deal is concluded with the LMLC STC plans to make savings of around Rs 160 million budget subsidies on the sale price of flour compared to last year. With a price of $ 532 per tonne of flour last year, subsidies on retail prices were Rs 627 million. This year, the quoted price of $ 461 per tonne that the budget subsidies is estimated at Rs 468 million. STC will pay the pound of flour at Rs 7.26 for resale to consumers at Rs 5.85. With the contract last year, STC had paid Rs 8.38 per pound of flour.

The first shipments of flour under the new contract are expected to Port Louis in January of next year instead of February. For tactical reasons, STC continues its contacts with the Indian agent with events on deliverability and machining and does not preclude the possibility that Lall Mahal is known to provide a small amount of flour on the local market as Test.

Regarding the country's supply of cooking gas, STC did not want to take risks with new market entrants. A firm in the UAE, Aquiline and another Nigerian, A to Z Petroluem Products Ltd., had side of the most competitive as usual providers Petredec Ltd premiums. and Geogas. The tender for gas is only on the premium which is subsequently applied on the Saudi-Aramco Contract Price, which ranges from $ 900 to $ 1,100 per tonne.

Aquiline had submitted a premium of $ 98 to ton while the Nigerian firm was $ 118. For cons, the traditional suppliers were $ 155 for Geogas and $ 125 for Petredec. But the two most competitive offers were to fail the test of due diligence. Aquiline has no proven track record for delivery of gas on this scale and also suffers a deficit in terms of logistics for the transportation of gas in Mauritius. This listing was declared non-compliant. For its part, despite financial guarantees foolproof, A to Z Petroleum Products Ltd. Nigeria was unable to convince the STC its operational capacity. Readjust limits The preferred alternative was to open negotiations with Petredec Ltd.. to reduce the amount of the premium of $ 125 per tonne to $ 112. The previous contract, the premium paid by the STC was $ 147. For the last time, changes have occurred in the international gas market household. Maurice can no longer buy from Singapore or Malaysia due to a different mix and the two countries are in no way interested in exporting gas to specifications defined by Maurice. With the conclusion of the agreement with Petredec Ltd.. including new storage tanks should be operational in the port very soon, the domestic gas supply contract has been extended until September 2015, at least 67,000 tons per year to meet the local market. Moreover, new regulations will be promulgated in the official shortly to review the parameters in the pricing of petroleum products by the Petroluem Pricing Mechanism. So far, any price drop of petroleum products are passed to the consumer if the quantum exceeds 7%, while for the upward revision, the minimum is set at 5%. In areas of the STC, we justify this approach with caution with the start of the new formula there three years ago. At the same time, the experience of recent years has pushed the STC and PPC readjust the limits harmonizing 5%. Henceforth, all contributed to the decline of 5% will automatically be reflected on the price of gasoline and oil to the pump. This decision is reflected in the fact that the Price Stabilization Account will not be too positive or too deficient. Responding to the Private Notice Question of the Leader of the Opposition, Paul Bérenger on Tuesday in the National Assembly, advocating a downward revision of oil prices, the Commerce Minister Cader Sayed-Hossen, confirmed with the favorable world oil prices in recent months, the Price Stabilization Account recorded a surplus of Rs 586 million since last March. This allowed STC to offset a deficit of Rs 305 million accumulated at the end of February at Price Stabilization Account, which is positive since in area with Rs 281 million. Given the decline of the intervention from 7% to 5% limit, changes in the stabilization fund should be less substantial. Moreover, the imposition of the levy of Re 1 per liter of gasoline and oil pump shall report the sum of Rs 450 million in 2014 on behalf of Bus Replacement Mechanism incorporated into the budget. But this amount is more than double the budgeted amount of Rs 200 million in the Budget Estimates for the replacement of old buses with Modern Semi-Low Floor Buses. Deputy Prime Minister and Finance Minister Xavier-Luc Duval, will bring amendments to these estimates, unless additional Rs 250 million collected by the STC on behalf of the exchequer are used for other purposes ...

 

Text by Le Mauricien
 

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