March 14, 2012
Pakistan finalises barter deal with Iran
The barter deal of exporting one million tonnes of wheat and 200,000 tonnes of rice in exchange for fertiliser and iron ore has been finalised between Pakistan and Iran despite international pressure.
The Trading Corporation of Pakistan (TCP) and Pakistan Agricultural Storage and Supplies Corporation (Passco) signed the documents here Monday. An official of the Commerce Ministry officials told Dateline the agreement was signed following a decision on trade expansion taken by President Asif Zardari and his Iranian counterpart Mahmoud Ahmadinejad in Islamabad last week.
The official said negotiations with Iranian authorities in this regard were finalised. The private sector in Iran will import wheat from the TCP and Passco and payment will be made in local currency through barter trade or using banking channels between the two countries," he added.
Pakistan has a surplus stock of two to three million tonnes of wheat following a bumper season. He said the prices of wheat in the international market were not much attractive as compared to the domestic market. "It will be better to export the surplus stock to save a hefty amount being spent on storage," he added.
He said the barter trade would lessen pressure on foreign exchange reserves, which were being spent on import of fertiliser due to domestic shortage. Pakistan's urea production capacity is estimated at 6.9 million tonnes, seventh largest in the world and enough to meet domestic requirements.
The fertiliser industry has invested US$2.3 billion over the last three years to enhance production capacity. However, shortage of gas, a vital input for fertiliser manufacturing, has brought down production by two million tonnes, increasing the import burden this winter.
The official said Pakistani rice was very popular in Iran and was prepared for every festival and special occasion. The wheat milling capacity in Iran is about 25 million tonnes per year and only half of the capacity is utilised. Iran wants to use Pakistani wheat to make quality floor, biscuits and other product for re-export to Central Asian countries.
