May 12, 2006

 

Australia's AWB expects Indian wheat contract will be met

 

 

Australia's monopoly wheat exporter AWB Ltd. expects its contract to supply 500,000 tonnes of wheat to India will be completed in full, despite delays to the shipping programme related to quality issues, company spokesman Christian Sealey said Friday.

 

AWB is also looking for alternative markets for three wheat cargoes that were destined for India as part of the contact but remained in Australian ports, he said.

 

Two cargoes totalling about 92,000 tonnes are discharging at the south Indian ports of Chennai and Tuticorin, after quality related delays.

 

Sealey said both sides are still negotiating over the stringent quality specifications in the contract.

 

India has strict requirements in the contracts that are proving difficult to meet in some cases, he said.

 

"We're working through the issue with our customers," with negotiations underway between the company, Australian Quarantine & Inspection Service, or AQIS, the Indian government and State Trading Corp. of India Ltd.," he said.

 

A senior Indian government official said Thursday "We haven't cancelled the contract nor has State Trading Corp., which imported wheat on behalf of the government, encashed the performance guarantee for the contract so far."

 

India hopes and expects the contract will be executed in accordance with the stipulated quality norms, the official said.

 

It would be preferable for AQIS to certify the cargoes meet the norms specified in India's contract before the shipments set sail, to avoid the risk of rejection at the port of entry, the official said.

 

Meanwhile, AWB has a delegation attending a meeting in India today to look at the terms and conditions, and to work out the wording of contracts for the next Indian tender to import 3.0 million tonnes of wheat.

 

"If we are satisfied with the terms and conditions, we will be definitely looking to participate in the three million tonnes tender, that goes without saying," Sealey said.

 

Industry officials in India have expressed concern that the quality issues might deter many exporters from bidding in the new tender, which closes May 18.