Implementation of resolution 1472 (2003)

UPDATE 

21 April 2003

1.            Priority list.   Following further contacts with suppliers of potential priority contracts and analysis of their responses, the list of priority contracts has been further revised. The list currently contains 266 contracts, down from the original 526 contracts.  Please note that the list contains both contracts (160) with goods that can definitely be shipped by 12 May 2003, as well as some (96) for which contacts with suppliers are still ongoing. Please also note that balances referred to in Table 1 include values of all undelivered quantities and not only the values of goods that can be shipped by 12 May 2003, as in many cases only partial delivery of outstanding quantities would be possible before the end of the 45-day period mandated under resolution 1472 (2003). Details for goods positively identified as ‘shippable’ by 12 May 2003 are provided separately in paragraph 2 below.  

The priority list will continue to be updated based on responses from the suppliers. Concerned UN agencies and programmes will continue to review responses as well as their own requirements. During the past week, WFP added to as well as deleted a number of contracts from the priority list. In addition, UNDP added 17 new contracts to the list as possible priorities and has started contact with suppliers to establish how soon the goods can be shipped. Table 1 below summarizes priority contracts (confirmed and still under consideration) as at 21 April 2003. The detailed priority list will be forwarded to the members of the Security Council electronically.  

Table 1 – Summary of priority contracts (as at 21 April 2003)

2.         Goods to be shipped by 12 May 2003.   Based on the responses received from suppliers, it was established that, out of 266 contracts considered as priority, goods under 160 contracts valued at $454.6 million could be shipped within the 45-day period. This represents an increase from 137 contracts with goods valued at $395 million reported last week. Most of the goods are in food ($236.4 million), electricity ($119.3 million) and health ($53.1 million) sectors. Table 2 in paragraph 3 shows the breakdown per UN agency and programme. It should also be noted that in many cases goods ‘shippable’ by 12 May 2003 do not represent the full remaining balance of a contract; instead, these are often partial shipments available prior to 12 May 2003. Only these values are included in the above figure of $454.6 million and only these would be subject to amendments to be negotiated by the UN agencies.  

3.         Transit goods vs. new shipments.      Based on available information, the majority of goods that could be shipped by 12 May 2003 appears to be priority goods already in transit and subsequently adopted by the UN agencies for delivery to alternative locations. The incomplete information, based on the inputs of two out of the five agencies involved, indicates that 97 per cent of the goods to be subject to paragraph 4 of resolution 1472 (2003) are in-transit goods – 100 per cent for WFP and about 90 per cent for UNDP (see Table 2 for currently available details). The emerging outcome is not entirely unexpected – responses to UN agencies on priority goods not yet shipped indicate that suppliers would be able to ship goods in 21 - 210 days, subject to issuance of letter of credit. The average number of days required by suppliers to start shipping the goods was 45 from the date of issuance of letter of credit, where the issuance is still pending. This average indicates that many suppliers have also been trying to fit their deliveries into the mandated 45-day period, often not aware that the period must cover not only shipping of the goods, but also all contractual changes, and issuance of approval and letter of credit, where applicable.  

Naturally, the tentative shipping times reported for cases where suppliers hold valid letter of credit were much shorter, ranging from 7 - 35 days, as opposed to 21 - 210 days reported for cases where no letter of credit had been issued. The tentative shipping times reported by the contacted suppliers are, in general, shorter for food items but longer for items such as medicines and electricity equipment that require longer production lead times. If the reported tentative shipping times are compared with a 45-day period mandated for shipping of the goods under resolution 1472 (2003), it becomes clear why a number of contracts initially considered as priorities had to be removed from the list once the details of possible shipping schedule were established through direct contacts with suppliers.  

In summary, the 45-day deadline remains the main reason for a limited number of contracts to be ultimately considered and processed under paragraph 4 of resolution 1472 (2003), especially when it comes to un-funded contracts and/or contracts with no letter of credit issued that are eligible for prioritization under 1472 (2003), but could not meet all the requirements during the 45-day period, to include amendment negotiations and actual shipping of the goods.  

Table 2 – Priority goods that can be shipped by 12 May 2003 (as at 21 April 2003)

* UN agency did not provide breakdown of transit and non-transit goods (incomplete data)

** Data as of 14/04/03. UN agency did not provide 21/04/03 update 

4.         Non-priority goods in transit.  The Office of Iraq Programme (OIP) has contacted a number of suppliers of non-priority contracts who initially reported goods in transit and sought further information, to include a proof of shipping on or before 17 March 2003, in order to process these goods under paragraph 4 (g) of the resolution.  Of 364 contracts initially included in the transit non-priority list, contacts have been made in 310 cases, with contacts pending for the rest. These contacts and further review of available paperwork revealed that almost 50 per cent of non-priority goods/contracts (151 out of 310) initially reported to OIP by suppliers to be in transit turned out not be in transit at all. The UN agencies contacting suppliers for priority goods in transit apparently found the same, albeit on a smaller scale. As a result of these exchanges, the total number of contracts and the value believed to be in transit have now been considerably reduced in comparison to the original estimates. Summary of contracts in transit is provided in Table 3 and a detailed list will be provided to the members of the 661 Committee electronically.

Table 3 – contracts in transit as at 21 March 2003

* Please note that the values indicate total for goods yet to be delivered and not the value of goods that may be shipped by 12 May 2003. Only partial shipments of the balance goods are possible by 12/05/03 in many cases. 

OIP will continue to collect responses from the suppliers of non-priority goods in transit and process them to the extent possible.  

5.           Processing of amendments on priority goods in transit.   So far, the Office of Iraq Programme has received and processed six such amendments. All six were submitted by WFP and involve contracts for wheat, sugar and rice. The total value of the contracts was reduced by $31.91 million as the result of the amendments, mainly due to the change in transport and insurance costs to the suppliers but also through reduction of quantities to be delivered in some cases. The net cost to the escrow account, however, will ultimately have to include storing of the goods to be received in alternative locations and transport of these goods to Iraq.  

6.            Alternative delivery locations. There were no new authentications of goods delivered to alternative locations under the Programme since the arrival of 50,000 tons of wheat to Kuwait last week. Apart from presence in the ports in Turkey, Syria and Jordan, a team of 10 UN Independent Inspection Agents (Cotecna) has established presence in Kuwait.  Cotecna staff briefly visited their offices in Umm Qasr and found furniture and office equipment completely looted, cabling, light fittings and power outlets either stolen or damaged and the office files in disarray.      

7.            Information to suppliers.   A new notice for suppliers, to include updated priority and transit goods lists, was posted on OIP website on Thursday, 17 April 2003. The notice primarily advised suppliers of priority contracts with goods that can be shipped within 45-day timeframe and those with goods in transit on actions being taken. The notice further informed the suppliers of other goods that any further action on such goods   would be subject to decisions by the Security Council. At this point, very little new information can be made available to suppliers of non-transit and non-priority goods by OIP although the number of queries on such goods addressed to OIP has increased dramatically over the past several weeks. Further updates will follow shortly.   

8.            Applications for emergency supplies outside the Programme.   Paragraph 7 of resolution 1472 (2003) provides for fast-track approval of contracts for emergency supplies outside the Programme, which remain subject to sanctions provision. The number of such applications has increased further and stands at 128 applications as at 21 April 2003 or 22 more than reported last week.  Most of the applications (84) have been submitted by the UN agencies and programmes and other international organizations, to include UNICEF (60), WFP (15), ICRC (12) and WHO (6). The remaining 44 have been submitted by various permanent missions on behalf of NGOs to include USA (10),  France (6), UK (6) and Belgium (5).  

9.            Processing of applications under the Goods Review List (GRL).  The influx of new applications under the Programme has been considerable after 17 March 2003 – total of 698 applications worth over $1.5 billion have been received and registered by the Office of Iraq Programme since then. Last week, OIP received 76 new applications, most of them (61) under the ESB (59 per cent) account.  This was for the first time in weeks that the number of new applications was below the weekly average, perhaps an indication of a huge influx gradually subsiding.

Table 4 contains details of applications in various stages of processing by OIP and UNMOVIC/IAEA as at 21 April 2003. These applications will retain their current status until further notice.  

Table 4 – 59% account applications in processing (21/04/03)

  Other Implementation Updates