The government expects to lose 20-30 billion baht from its mortgage programme this year including 4 billion baht from releasing 2.6 million tonnes of milled rice in the Commerce Ministry's stockpile.

Deputy Prime Minister Korbsak Sabhavasu said the mortgage programmes for crops implemented by previous governments caused 16 billion baht in losses from mortgages on rice, accounting for 80% of all crop losses in the programme in 2008-09.

The total amount of the loss will depend on the ability of government agencies to manage sales of crops this year, he said.

Commerce Minister Porntiva Nakasai admitted the ministry's release of its 2.6-million-tonne rice stock would likely to lead to 4 billion baht in losses but added that the amount was justified.

"The Commerce Ministry in the past faced losses of 13 billion baht from selling the same amount. I have tried to keep the process transparent and maintain good intentions," she said.

The ministry held bids to sell the rice and 17 exporters won. However, when the ministry suspended delivery of the rice, those exporters threatened to sue the government.

Mr Korbsak believed the Commerce Ministry needed to take responsibility for the matter as it had never reported the bid to the cabinet.

Previously, the cabinet approved only the criteria for selling rice and other crops and also required the ministry to report the sales of all crops under pledging programmes.

"I have already checked the contracts between the ministry and private firms and believed that private companies cannot sue the government as there are no details in the contract allowing them to take legal action in the event the Public Warehouse Organisation cannot deliver rice," he said.

Mr Korbsak said the Foreign Trade Department had the capability and responsibility to manage sales of the crops while the Public Warehouse Organisation only managed the stockpile.

Mrs Porntiva said the working committee, chaired by the director-general of the Foreign Trade Department, Chutima Bunyapra-phasara, would set price strategy for the bidding of crops under mortgage schemes by next week, then the models could be used for consideration in similar cases in the future. In principle, government stocks should be released at the right time to ensure the least damage to the taxpayers.

Mrs Porntiva believes the legal framework should be clarified first to avoid similar problems in the future.

Meanwhile, the ministry has not yet decided whether to void the bidding or renegotiate prices with the 17 winning exporters. Ms Chutima's committee is discussing the matter.

Source: Bangkok Post