PWO cancels sale, will refund all guarantees

"The bidding for 1.95 million tonnes of rice was worth about Bt27 billion. The organisation had received bank guarantees and deposits from the 17 winners worth about Bt2.4 billion, which should be returned to all winners by today," said Yongyos Palanitisena, acting president of the PWO.

The PWO spent two hours negotiating with the 17 buyers following the prime minister's instructions to scrap the release of 1.95 million tonnes of government rice.

The auction had been conducted by the Commerce Ministry. Each winner had to put up a 5-per-cent bank guarantee.

Despite losing some business opportunities, all the buyers agreed not to sue the government for the abrupt breaking of contracts.

However, some giant exporters have called on the government to consider opening a new bidding round for a larger amount of rice, as they face lower supplies and losses from the cancellation.

Wichai Srinawakul, managing director of Charoen Phon Ricemill, said the government should carefully consider opening the next bidding with clear regulations to ensure no repeat of the result of the last round.

"The cancellation created a negative image for the government. Rice traders may be afraid to participate in the next bidding if there's disagreement within the government," he said.

The government should set appropriate prices for the next pledging scheme, as the guaranteed prices of Bt11,800 to Bt10,000-Bt10,500 for the upcoming harvest are too high, he said.

Meanwhile, after surveying maize held by the government under the pledging scheme in the North, Commerce Minister Porntiva Nakasai said the stocks had deteriorated in quality because of the delay by the government in deciding to sell the maize to traders.

The government will suffer huge losses from the maize-pledging project, as traders may no longer be interested as the crop has continued to spoil after long storage, she said.