After deciding to go slow on the sale of imported edible oil through the public distribution system (PDS) due to poor response from states and a sharp fall in open market prices, the central government has directed four public sector units ? the State Trading Corporation, the MMTC, PEC and Nafed to dispose off the unsold oil into the open market through regular tenders. Sources said more than 150,000 tonne of edible oil, which was contracted for, but not lifted by the states, would be sold through this process.
?PSUs have been asked to float tenders of quantities of around 2,000 tonnes each, for disposing off the unsold oil and the government also plans to compensate for losses arising out of the sale,? a senior government official added. The entire stock of unsold edible oil will have to be sold by January 15, 2009.
On Thursday, the PEC invited bids to sell 2,125 tonne of crude degummed soyabean oil, while Nafed invited bids for the sale of around 2,000 tonne of imported RBD palmolein oil. Earlier, the PEC also sold around 2,000 tonne of crude soyoil to international trading company Cargill Inc at Rs 43,200 ($863) per tonne. The PEC had floated the tender on November 28.
In May, India announced a scheme for the distribution of around 1.0 million tonne of edible oils through the PDS at subsidised rates. However, of the targeted 1.0 million tonne, just around 360,000 tonne was contracted for import and around 182,000 tonnes has been distributed because of poor response from state governments.
Agencies reported that some states had also demanded that the Centre raise the subsidy to make edible oil available at prices substantially cheaper than the domestic rates. States like Karnataka and Tamil Nadu have also demanded that the Centre allow them to import edible oils directly.
When the government announced the scheme for subsidised distribution of edible oils to make the commodity easily available for the poor, the price of refined soyoil in the open market was at around Rs 573.20 per 10 kg, but since August prices have dropped sharply and are now being quoted at around Rs 466 per 10 kg, posting a fall of more than 19%.
Similarly, in the case of crude palm oil, the largest imported edible oil in the country, prices at local markets have shed almost 50% and is now quoted at Rs 254.40 per 10 kg. International prices of crude palm oil and soyabean oil have declined by 19.80% and 13.24% respectively in just a month starting October 17.
Indian edible oil prices have a direct correlation with international markets because the country imports more than half of its annual edible oil consumption of 12 million tonnes.