TCB seeks Tk 2.0b from govt to buy essentials to keep market stable

The Trading Corporation of Bangladesh (TCB) has sought Tk 2.0 billion from the government to procure essential commodities for uninterrupted supply aiming to keep the market stable and tolerable.  

An official said the top priority of the present government is to keep the prices of essentials within the purchasing capacity of common people. The state trading agency procures essential goods and disburses those among the consumers through its dealers across the country, he added.

In fiscal year (FY) 2012-13, TCB was given Tk 8.0 billion as counter-guarantee from the government, against which it had imported commodities and sold those according to the TCB's plan.

The official said in the case of taking Loan against Trust Receipt (LTR) from banks, the TCB has to pay interest at a rate between 14 and16 per cent thus increasing the import cost. As a result, the prices of the products increase and TCB has to take subsidy from the government, he said. The cost will become much lower and the consumers will be able to buy the goods at a tolerable price if the commodities are imported through cash payment, he added.

Earlier, the state entity had sought Tk 3.0 billion as interest- free working capital for keeping its market intervention activities smooth round the year and supplying the goods at an affordable price among the consumers, said the official of the TCB.

But the Ministry of Finance (MoF) has turned down a ministry of commerce (MoC) request to provide the amount to the TCB as working capital, the sourc said.

The MoC sent a letter to the MoF on behalf of TCB seeking Tk 2.0 billion as working capital for market intervention for the current FY.

TCB sources said there was a plan to purchase essentials worth Tk 4.74 billion through import or locally in the FY 2013-14.

Of the amount, Tk 2.77 billion will be needed to purchase essentials for the upcoming holy Ramadan, they said.

The TCB will not have to take LTR at high interest rate and the commission for letter of credit (L/C) will also come down proportionately if the essential goods are purchased through cash payment, TCB sources said adding that the government subsidy in this regard will also decrease.

A senior MoC official told the FE that the working capital was necessary for the government's market intervening arm as it lacked the required funds to buy commodities for open market sale at subsidised rate when the prices of essentials go up.

In the last three fiscal years, the government had to provide over Tk 2.0 billion as subsidy to TCB.

In FY 2012-13, the government provided TCB with Tk 586.89 million, in FY 2011-12 Tk 775.88 million and in FY 2010-11 Tk 690.80 million against the losses it had incurred due to sale of the essentials at subsidised rates.