Food ministry seeks auction of 8,198 tonnes of damaged Passco wheat, transfer of losses to federal SPV

The Ministry of National Food Security and Research has sought federal approval to auction 8,197.989 metric tonnes of flood-damaged wheat held by the Pakistan Agricultural Storage and Services Corporation (Passco) and transfer the resulting financial losses to the special purpose vehicle created under the corporation’s winding-up plan, The Express Tribune reported. 

The ministry proposed that the stock be sold on an as-is-where-is basis through open competitive bidding under Public Procurement Regulatory Authority rules. 

It also asked that the remaining loss be parked in the SPV or another federal government entity in line with the Passco wind-up framework approved by the federal cabinet.

The ministry informed the Economic Coordination Committee that the damaged wheat had an estimated value of Rs1.049 billion. The actual loss would be determined after deducting revenue generated from the auction.

A committee comprising representatives of Passco, the Ministry of National Food Security and Research and Zarai Taraqiati Bank Ltd was formed on December 23, 2025, to collect samples and conduct laboratory tests.

The committee submitted its report on January 30, 2026, identifying damaged wheat stocks in Hafizabad, Alipur and Dera Allah Yar zones. Laboratory analysis found the wheat unfit for human consumption.

At Seetpur centres, prolonged submergence caused estimated weight losses of 20% to 30%. Further assessments involving the PCSIR, Punjab Food Department and other institutions placed the losses between 18% and 30%, depending on storage conditions and whether the wheat was imported or locally produced.

The ministry said the financial treatment of the 2025 losses should differ from that applied to wheat damaged in 2022.

Losses recorded in 2022 were entered in Passco’s accounts and distributed among shareholders. However, accumulated losses in 2025 had pushed shareholder equity into negative territory.

The ministry argued that shareholders could not be required to absorb further losses because their liability was limited to their paid-up capital. It noted that the federal government had already established an SPV to hold Passco’s liabilities as part of the corporation’s winding-up process.

The Passco board had ordered a fact-finding inquiry at its 157th meeting on October 3, 2025. The inquiry report issued on October 7 concluded that the damage resulted from a natural disaster and found no negligence or misconduct by the staff.

The report recommended the urgent disposal of the damaged stock through open tenders.