Bangladesh Keeps Options Open on Grain Penalty

Bangladesh is keeping its options open on whether to seek a penalty from Continental Grain Co of the United States for alleged breach of a wheat shipment contract, but is also asking the company to expedite shipment of the cargo, a senior Food Ministry official said.

The official, who declined to be named, said the company under a deal agreed to ship 100,000 tonnes of wheat by April 7 and another 100,000 tonnes by April 16. But it shipped only 126,000 tonnes altogether.

The supplier will have to pay penalty at a rate of two dlrs per tonne for every delayed day according to a document signed by both the Food Ministry and the suppliers’ agent in Dhaka, he told Reuters.

“If they arrange quick shipment, we may take a lenient view,” the official said. The issue is expected to be decided at a cabinet meeting scheduled for next Sunday, he added.

A pro-government Bengali daily “Dainik Janata” reported today that Continental Grain could face a penalty of 200 mln taka (6.49 mln dlrs) for alleged failure to maintain shipment schedule.

The local agent of Continental Grain, Shafi Ahmed Choudhury, told Reuters he applied to the Bangladesh government for an extension of the shipment period because loading of wheat at London was being delayed due to bad weather and a faulty elevator at a grain silo. But the government has not yet granted the extension, he said.

Choudhury said the freight rate and price of wheat had gone up after the deal was signed, which resulted in a financial loss to the company.

He said he was not “officially informed” of the move to impose a penalty, although he was “not totally unaware of it.”

Continental Grain officials in New York declined to comment.