The Foreign Trade Department will likely negotiate with private rice-exporters for a more advantageous deal regarding the government's 2.6-million-tonne stockpile.

Government sources said a special committee would be set up by the Cabinet next week to oversee the matter, since neither Deputy Prime Minister Korbsak Sabhavasu nor Commerce Minister Porntiva Nakasai was prepared to terminate the sales contracts already signed with 17 exporters.

Both are worried they will be sued by the private firms, which entered into contracts to buy 2.6 million tonnes of rice from the government for Bt14,200 to Bt15,500 a tonne. The sale will lead to a multibillion-baht loss for the government.

The sources said the Public Warehouse Organisation, a state enterprise and counterparty in the rice contracts, would be a respondent if private firms took their case to court.

Since May 22, several of the 17 buyers of government-owned rice have sought permission to remove rice from the warehouses.

They placed a 5-per-cent bank guarantee as a deposit during bidding. Exporters said their customers were waiting for shipments.

The 17 exporters who won the bidding include Siam Indiga, Asia Golden Rice, Capital Cereals, Chaiyaporn Rice and Food Products, Ponglarb, Singto Thong Rice and CP Intertrade.

A senior commerce-ministry source said the government might have to strike a compromise with exporters as most of the successful bidders were under contractual obligation to deliver the rice to foreign buyers.

Still, the Foreign Trade Department plans to ask for a higher price for the stockpile to reduce losses, but any increase is expected to be slight, due to prevailing market conditions.

"More than 50 per cent of the expenditure in executing rice-pledging schemes to help farmers has been diverted to unscrupulous politicians as well as traders. There are always problems with these farm-price intervention schemes, because the entire process is non-transparent," said the source.

Department director-general Chutima Bunyapraphasara said she could not yet decide on how the bidding should be settled.

The department will discuss the matter with members of the special committee after it is set up next week.

On Tuesday, Prime Minister Abhisit Vejjajiva put the controversial rice sale on hold following a feud between Deputy PM Kobsak and Commerce Minister Porntiva.

Porntiva, of the Bhum Jai Thai Party, a key partner in the coalition government, entered into the sales contracts with exporters and then asked the Cabinet to endorse the ministry's decision. Korbsak, a Democrat, opposed the commerce minister's move.

Source: The Nation