The long dominance of refiners in supplying soybean oil to the Trading Corporation of Bangladesh (TCB) is finally ended by a trader.
The refiners had long been supplying soybean oil to the TCB at an 'exorbitant' price in connivance with each other, alleged officials.
The state-run trading arm was a 'hostage' to the refiners, they added.
The Ministry of Commerce then decided to 'free' the TCB from the 'grip of the refiners' by allowing traders to participate in the tender process for supplying any item to the corporation.
The ministry move came as a refiner did not supply soybean oil to the TCB despite winning a bid early this year, citing delay in work order issuance, forcing the TCB to buy edible oil from others at further higher prices.
The ministry officials earlier thought that a company having a refinery would be in a better position to supply the commodity. That prompted them to keep a provision that only the refiners and mill owners were eligible to supply oil to the TCB. But the idea proved wrong as the refiner did not supply oil despite winning the bid.
The TCB sells essential items in the cities across the country by collecting those from local and international sources in order to keep commodity prices stable and give relief to commoners.
The officials said the TCB floated a tender in mid-May this year to buy 3.0 million litres of soybean oil in two-litre bottles.
Then the Gemcon Food and Agriculture Products Ltd, a company having no refinery, quoted Tk 127.77 per litre, including advance income tax, and won the bid, beating the refiners who had been regularly supplying oil to the TCB.
In the bid, the Meghna Edible Oils Refinery Ltd quoted Tk 132.95 per litre, City Edible Oil Ltd Tk 134 per litre, Super Oil Refinery Ltd Tk 138.75 per litre, Bashundhara Multi Food Products Ltd Tk 142.95 per litre, and Shun Shing Edible Oil Ltd Tk 145 per litre.
According to the TCB data, presently, per litre of bottled soybean oil is selling up to Tk 160 in the kitchen market.
Contacted, Commerce Minister Tipu Munshi on Sunday told the FE that this time there was better competition than in the past.
Asked if the refiners had been charging excessively due to their dominance in participating in TCB's tender, the minister said he was not aware of high prices.
"In the past, the tenders were carried out following rules and regulations, too," he said, adding: "This time, the participation was different, thus a better price was quoted."
Gemcon Group's Chief Financial Officer Captain (retd) Z A Zakir said sourcing of soybean oil of his company was different from others, thus allowing them to quote the lowest price in the bid.
"As a refiner, they are supposed to enjoy advantages. But oil price depends on our sourcing and profit compromise," he told the FE.
Asked if finally his company will be able to supply oil to the TCB in time, Mr Zakir said he did not foresee any possibility of failure.
While talking to the FE, Director of City Group Biswajit Saha claimed to have quoted comparatively lower than the present international price of edible oil.
"I have quoted the price as I sell to my distributors," he said.
Mr Saha was sceptical whether the bid winner would be able to supply quality oil or not. "When a miller fails to supply oil at such a lower price, how will a trader be successful?"
Price of crude soybean oil is now showing a falling trend, and on Friday, a tonne of oil was selling at US$1,286, compared to $1,499 in May.
A senior official at Meghna Group told the FE that the present production cost of soybean oil was over Tk 145 per litre and it was' absurd' that one could quote Tk 127.77 per litre.
Citing the high price of soybean oil in the international market, the official said there was no way of making monopoly business here. "There is no future of commodity business in Bangladesh."
He suggested that TCB import crude oil and supply it to refiners to get soybean oil at low prices.
TCB Chairman Brigadier General Ariful Hassan said the corporation wanted to explore if any business entity, apart from refiners, could supply soybean oil at comparatively good prices.
"From now on, anyone who has the required solvency will be able to participate in any tender of the TCB," he said.
"Now due to high competition, they are quoting a price keeping low profit margin," said Mr Hassan.
He said there was no way to supply sub-standard products to the TCB just because of quoting low prices.
"Rather, the imported refined soybean oil will be of international standard," he said, adding: "We only receive products in the godown after they pass proper tests."
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