ISLAMABAD: The economic coordination committee (ECC) of the cabinet on Wednesday expressed reservations over the procedure for raising funds from a consortium of six banks by Trading Corporation of Pakistan (TCP) for procurement of sugar and other commodities and sought details of such agreements.

A senior government official told that Finance Minister Dr Abdul Hafeez Shaikh, who presided over the meeting, expressed reservations over the selection of banks and said he had been informed of cases in which commissions were paid in facilitating banks to lend to government institutions.

After discussions, the finance minister directed the TCP to furnish details of the selection of banks and the terms and conditions of the financing in the last few years and asked Finance Secretary Dr Waqar Masood Khan to examine the procedure and terms and conditions involved.

The meeting also agreed to provide federal government's guarantees to the provinces for procurement of 6.575 million tons of wheat on credit from commercial banks during the current season but decided to reduce the size of strategic reserves to 1 million tons from 3 million tons.

The committee decided that Punjab should procure 3.5 million tons of wheat, followed by Sindh and Passco 1.3 million tons each, Khyber Pakhtunkhwa 0.4 million tons and Balochistan 70,000 tons.

A committee on strategic reserves of wheat headed by the deputy chairman of the Planning Commission had recommended to the ECC that export of wheat should continue and the government should not ban its export at procurement stage but a suitable cut-off date should be fixed after the procurement season.

The provincial governments would maintain strategic reserves proportionate to their procurement share. However, if the provinces desire to procure more wheat they would have to arrange funds at their own without the support of the federal government, the sources said.

The Punjab government informed the committee that it still had 2.5 million tons of wheat stock from the previous year and was taking steps to offload it in two months.

The committee was also informed that TCP had imported about 100,000 tons of fertiliser for Rabi season and another 130,000 tons from Saudi government would arrive on March 19.

The ECC was informed that a sufficient stock of 33.3 million tons of sugar was available in the country and would be enough to meet domestic requirements until October, that is beyond Ramazan. The private sector had also opened letters of credit for 187,000 tons of sugar.