ISLAMABAD: The Trading Corporation of Pakistan (TCP) on Friday proposed that the government should issue bonds to clear piled up mark up of Rs 222 billion, of which total receivables are Rs 311.241 billion as of March 6, 2025, in order to alleviate the burden of mounting interest.

The move comes as banks have shown reluctance to retire liabilities due to the heavy interest involved.

In a briefing to a National Assembly panel headed by Khurshid Ahmed Junejo, Chairman TCP Rafeo Bashir Shah outlined a proposed payment plan to clear the organisation’s liabilities. However, the meeting ended without any concrete outcome, as no representatives from the Ministry of Industries and Production (MoI&P) or its affiliated organisations, such as the Utility Stores Corporation (USC) and the National Fertiliser Marketing Company, attended it. These organisations owe significant amounts to TCP.

The Chairman emphasised that the concerned ministries and departments should propose allocations in the 2025-26 budget to clear their outstanding liabilities with TCP. A representative from the Finance Ministry also suggested that relevant ministries bring their proposals during the budget exercise to ensure proper allocation.

According to the Chairman of TCP, the commitment from recipient agencies to pay both the principal and mark-up amounts through written agreements, as approved by the Economic Coordination Committee (ECC), stood at Rs 17.005 billion. Meanwhile, payments accepted by recipient agencies, based on reconciled and signed minutes or letters backed by ECC decisions, amounted to Rs 72.296 billion, which is undisputed.

He further explained that the outstanding amounts owed by the federal government on account of subsidy shares—including mark-up on delayed payments— receivables from the Ministry of Industries and Production (formerly MINFAL) for sugar procurement, and disputed principal amounts from recipient agencies, totalled Rs 221.940 billion.

The Chairman of the National Assembly panel pointed out that decisions regarding payments to TCP had been made by both the federal and provincial governments, yet no clear method has been established to clear these liabilities.

Rafeo Bashir Shah added that in the last NA panel meeting held on April 13, 2023, and the subsequent meeting presided over by the Secretary of Finance in December 2023, all relevant departments were directed to reconcile the figures. It was also instructed that the agreed amounts be included in the budget, while disputed amounts should be discussed internally and reported back to the committee.

“We had meetings with all federal and provincial departments and organisations based on the decisions taken at the meeting led by the Secretary of Finance, but reconciliation has not been completed,” he noted.

He further mentioned that when the Finance Secretary held a meeting in December 2023, the liabilities stood at Rs 299 billion, which have now increased to Rs 311 billion— an addition of nearly Rs 10 billion due to mark-up.

Rafeo Bashir Shah also informed the panel that TCP had been directed once again to import urea. However, TCP included a plan to address its debts and liabilities in the process. He explained that both federal and provincial governments had refused to pay the Rs 222 billion mark-up, arguing that since the decision to import was made by the federal government, it should bear the responsibility for the mark-up payments.

TCP proposed that funds be allocated in the upcoming budget to clear the undisputed amounts, as the IMF does not permit spending beyond budgeted allocations. TCP also suggested that the Finance Division issue bonds to settle the disputed Rs 222 billion, similar to the approach taken in 2009-10 when TCP’s receivables stood at Rs 78 billion.

In response to a question by Rana Atif, Chairman TCP mentioned that he had informally discussed with banks the possibility of capping the mark-up. However, as it is a commercial loan, the banks were unwilling to agree to such terms.

“Recently, when TCP repaid Rs 17.7 billion, with contributions from USC, NFML, and the Sindh government to the banks, they were not pleased. This is because the banks have a commercial interest in continuing the mark-up,” he explained.

After a detailed discussion, the panel directed all concerned federal and provincial ministries and their departments to reconcile their figures within two weeks so that a viable solution could be presented to the federal government. The panel also instructed TCP to share its payment details for the past five years. —MUSHTAQ GHUMMAN