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. Last Updated: 07/27/2016

State Rakes In $230M in Auction for Sugar Quotas

The government made $230 million Monday by auctioning off next year’s sugar cane import quotas.

There were few surprises in the tender for the quotas — which allow companies to reduce their import tax from the normal 30 percent to 5 percent — with most going to already established major market players.

Prices were higher than expected, mainly due to the bidding of energy-sector companies who, for the most part, came up empty. Among the other big names failing to win a quota was Alfa-Eko, the trading arm of Alfa Bank.

Unsurprisingly, the auction was somewhat frenetic.

"Companies from various industry sectors tried to buy large volumes, which had a negative influence on the course of the auction," said Igor Khudokormov, board chairman of Prodimeks, which bought up the most lots — 30 for $43.5 million.

"The companies that won were those that have been involved in the sugar business for a long time, because the prices for lots soared to such a level that the speculators were left behind," Khudokormov said.

Four companies — Prodimeks, Rusagro, Evroservis and Syukden — bought 60 percent of the quotas.

Quotas for the first quarter of 2001 (1.15 million tons) went for $61.6 million, $90 million for the second quarter (1.5 million tons), $60 million in the third (600,000 tons) and $18 million for the fourth (400,000 tons), said Gleb Tikhomirov, Syukden’s Russia director.

The prices for quotas in the second and third quarters were raised to the maximum: Most lots in the second quarter were sold for $63 to $64 per ton, while the average price for lots in the third quarter was $60 per ton.

Traders said that the current weakness of the euro against the dollar drove companies to bid as high as $64 a ton, which would still be cheaper than having to pay a 30 percent tax.