Leading commodity exchange NCDEX has said that Andhra Pradesh government procured 7,000 tonnes of sugar worth Rs 20.3 crore using NeML eAuction Market to deliver the sweetener to PDS consumers ahead of Sankranti.
NCDEX e Market Limited (NeML), formerly known as NCDEX Spot Exchange, has facilitated public distribution system (PDS) sugar procurement for Andhra Pradesh government in December 2014, NCDEX said in a statement.
During the price discovery, 20 active bidders from six states participated to supply sugar to the government, which received a total of 331 bids during the process.
The state government's offer attracted competitive bids compared to market prices by adopting the modern electronic spot market and saved precious resources.
Encouraged by the experience in December, the state government has decided to employ NeML eAuction Market and further increase the efficiency of PDS procurement by seeking district-wise bids for February 2015.
On January 13 and January 14, the state corporate body - AP State Civil Supplies Corporation (APSCSCL) used reverse e-auction mechanism to procure sugar for the month.
The weighted average price discovered in the auction was Rs 2,759 per quintal, saving of over Rs 7 crore to the state exchequer.
Use of NAM enabled the state government to split the quantity district-wise, giving opportunity to Small and Medium Millers and Traders to bid as per their capacity and local strengths.
The process has also paved way for entry of Cooperative Sugar Mills, which could not participate earlier.
NEML started its initiative to enhance participation and increase the competitiveness of the price discovery using its NeML e-Auction Markets (NAM) in June 2014.
Beginning with Maharashtra, the mechanism has been adopted by Haryana, Gujarat and Karnataka.
In the last six months almost 100,000 tonnes of sugar worth Rs 334 crore have been procured using NAM.
NAM has more than 300 sugar market participants ready to supply sugar to the state governments.
This year the market has added more than 180 sugar value chain participants including Sugar Millers and traders from different states.
"NCDEX believes in innovation and NAM is a unique mechanism to make procurements for the governments more efficient in a transparent and competitive mechanism," NeML Director Samir Shah said.
