UPDATE 1-Syria issues second food tender using Iranian credit
* Sellers must accept payment from Iranian credit line
* Traders say mostly Iranian companies taking part in previous food tender
* Seeks flour, previous tender included rice, sugar (Adds details, trader comments)
By Maha El Dahan
ABU DHABI, Dec 24 (Reuters) - A Syrian state purchasing agency has issued a tender to buy 50,000 tonnes of flour with payment through an Iranian credit line, a tender document showed.
It was the second time Syria had asked to buy food through Iran this month after asking for quantities of sugar, rice, flour, oils and various other commodities in a tender which closed on Dec. 17.
Syria's General Foreign Trade Organisation (GFTO) said sellers must accept payment through an Iranian credit line under an agreement between the Commercial Bank of Syria and the Export Development Bank of Iran.
The deadline for the flour tender is Jan. 6 and all offers should be submitted in euros on a cost and freight basis, the document showed.
A Syrian trading source said offers submitted for rice and sugar in the tender that closed on Dec. 17 were currently being negotiated.
"Most of the offers made for the tender are being done by Iranian firms who are offering rice and sugar that are already available inside Iran," one Syrian trading source said.
"The price offers are also above the market price," he said.
GFTO officials were not immediately available to comment.
Sanctions imposed on Syrian President Bashar al-Assad's government by Washington and Brussels do not cover food but those on banking, asset freezes and the country's two-year-old civil war have made tenders difficult.
Syria has struggled in recent months to buy food through tenders for rice, sugar and wheat, although some deals have been struck outside of that process using middlemen.
Prior to asking for payment through Iran, Syria had asked to pay for food through an unlocking of funds frozen in international bank accounts.
The beginning of winter has made Syria's plight even more urgent and has prompted the United Nations to begin airlifting food into Syria from Iraq this month.
Despite Iranian firms participating in the most recent GFTO tender, other traders were still skeptical about Syria's new method of payment through Iran.
"I do not expect mainstream trading houses to participate in the Syrian tenders until the new payment mechanism with Iranian funds is clarified and the details are clearly documented," one European trader said. (Reporting by Maha El Dahan; additional reporting by Michael Hogan in Hamburg; editing by Hugh Lawson and Jason Neely)
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