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War-torn Syria had sought 1 million tonnes of wheat from trader
Zernomir to feed government-held territories and prevent bread
shortages.
Wheat exporter Russia supports Syrian President Bashar al-Assad
in the country's six-year-old war and has helped the government
with wheat aid.
But there was scepticism about the ability of Zernomir to
deliver on the deal from the start.
"The deal was canceled due to difficulties in banking operations
and execution," the government source said.
A Russian agriculture ministry official had told Reuters the
main problem was that the supplier lacked experience and had set
the price too low.
State grain buyer the General Authority for Cereal Processing
and Trade (Hoboob) instead signed contracts in February with
local traders for around 1.2 million tonnes of Russian wheat.
"We now have within our hands a lot of the quantities from those
contracts and we will also evaluate the situation and see
whether we need to go back to the market through tenders," the
source said.
Flat bread is a subsidized staple in Syria, where war is
estimated to have killed several hundred thousand people and
forced millions to flee their homes.
Hoboob has not named the Syrian firms that are helping it buy
Russian wheat.
Russian customs data shows Russia supplied 125,200 tonnes of
wheat to Syria in 2016/17, up from 47,000 tonnes in 2015/16.
Syria's strategic wheat reserves stand at six months' worth
versus just 17 days of reserves last year, Internal Trade and
Consumer Protection Minister Abdullah al-Gharb said last month.
(Reporting by Maha El Dahan; additional reporting by Polina
Devitt in Moscow; editing by Christian Schmollinger and Jason
Neely)
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