The Finance Ministry has called for a special audit into the loan agreements made by the Trading Corporation of Pakistan (TCP), citing growing concerns over the high markup rates imposed by commercial banks. The demand comes amid scrutiny from the National Assembly’s relevant oversight committees and raises questions about the competitiveness and transparency of the financial terms involved in TCP’s borrowing practices.
According to official sources, the Finance Ministry’s concerns were shared during a recent National Assembly committee meeting, where representatives from the Finance Division highlighted TCP’s liabilities, which currently stand at Rs156.9 billion. A major portion of this, amounting to Rs126 billion, is linked to urea procurement, with the remaining debt associated with wheat purchases. While the principal amounts have largely been reconciled, the markup charges and accrued interest remain disputed, prompting calls for closer inspection and an external audit.
In a bid to offset part of the liabilities, the Utility Stores Corporation (USC) has been directed to clear Rs24 billion in dues. Out of this, Rs6 billion is expected to be paid directly by USC, while the remaining Rs18 billion is to be managed through a government subsidy mechanism. Within this arrangement, Rs5 billion has already been earmarked for the current fiscal year, while the rest—Rs15 billion—is proposed to be allocated in the 2025-26 budget.
Additionally, National Fertilizer Marketing Limited (NFML) holds a debt of Rs53 billion, which is to be settled using a 50:50 cost-sharing model between the federal and provincial governments. While the federal contribution is expected to be Rs26 billion, only Rs10 billion has been made available thus far. The Ministry of Commerce, however, has yet to move the necessary summary for the disbursement of these funds, a delay the Finance Division highlighted during the committee session.
Reconciliation remains a central issue. Officials emphasized that before any further disbursement or financial adjustments can occur, all relevant stakeholders—including the Ministries of Commerce and Industries, provincial departments, and TCP—must reconcile data regarding the liabilities and interest components.
TCP clarified during the committee’s proceedings that prior to 2018, no formal system existed for reconciling such financial obligations. However, recent improvements now ensure that all agreements, especially those involving NFML, are properly documented. TCP continues to oversee procurement operations and the resulting interest liabilities, while urea distribution is managed by NFML and provincial entities. The Ministry of Industries, in turn, is responsible for coordinating with the Finance Division to ensure adequate budgetary provisions are made.
The committee expressed alarm over the mounting interest burden, particularly pointing to the fact that the Economic Coordination Committee (ECC) had not explicitly outlined markup terms in its approvals. In response, TCP maintained that credit arrangements were understood and processed through the State Bank of Pakistan with an implicit acknowledgment of applicable interest charges.
The case has triggered broader conversations about financial transparency, accountability, and the need for systematic reforms in how state-owned enterprises manage borrowing. The upcoming audit, once conducted, is expected to shed light on whether better financing options were overlooked and whether institutional checks failed to identify potentially unfavorable loan terms in time.