Bangladeshi buyer sues Australian sugar supplier

by Business Correspondent
August 1, 2011

http://www.weeklyblitz.net/1613/bangladeshi-buyer-sues-australian-sugar-supplier

Bangladeshi enterprise United Sugar Company, an affiliate of Meghna Group has served notice on Australian trading house named J.K. International, demanding compensation of US$ 30 million as the later failed to supply raw sugar on time causing closure of United Sugar Company, which is one of the private-owned sugar refineries in Bangladesh.

Dr. Kamal Hossain and Associates have served a legal notice on J.K. International on July 17, 2011 asking to meet the compensation within 7 days. As the recipient of the notice did not respond, a second notice was subsequently served on July 28, 2011. In this notice, J.K. International has bee suggested to appoint their arbitrator for settling the issue.

Australia based J.K. International was awarded a contract by Meghna Group for supplying 52 thousand tons of raw sugar to United Sugar Company at the rate of US$ 490 per ton. According to the contract, the consignment was supposed to be shipped from Brazil by June 5, 2011. Subsequently letter of credit was established by the buyer in favor of the supplier. Prior to opening of letter of credit, J.K. International informed the buyer that they are searching vessel for shipment of the consignment from Brazil and the entire volume of raw sugar would be shipped latest by June 30, 2011. Meanwhile, J.K. International forced the buyer to increase the purchase price of raw sugar from US$ 490 per ton to US$ 562 per ton.

But, ultimately J.K. International failed to supply the raw sugar, thus forcing the buyer to shut down their refinery in Bangladesh.

It may be mentioned here that, Bangladesh import roughly 1.3 million tons of raw sugar from abroad. There are 14 sugar mills managed by the state-run Bangladesh Sugar and Food Industries Corporation [BSFIC] while there are seven sugar refineries in private sector with annual production capacity of 2.4 million tons.

Bangladesh has started searching buyer for refined sugar in the international market. In 2010, Poland imported refined crystal sugar from Bangladesh. There have also been interests from buyers in China and United Arab Emirates in purchasing refined sugar from the country. Sources in local refineries said, Bangladeshi refinery mills produce 'European Commission Grade' refined sugar and China, South Korea, Canada and some African countries are potential markets.

Bangladesh government itself imported 50,000 tons of refined sugar in August 2010. During 2011, the government will import 100,000 tons of refined sugar and 1.4 million tons of rice to meet country's food security needs.

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