INDIA: UP mills upset over small disbursement of power purchases
Published: 05/16/2018, 9:12:39 AM
Even as cane dues for the sugar season 2017/18 in Uttar Pradesh continue to mount – over INR120 billion (US$1.76 billion) at last count – the Yogi Adityanath government has announced the release of just INR2.17 billion out of the INR8.50-billion power dues owed by the millers for settling the dues, according to India’s Financial Express newspaper.
While releasing the amount, cane commissioner Sanjay Bhoosreddy said that it must be ensured that 100% of the released funds are used to pay off the cane dues of farmers.
It may be mentioned that the timely payment of power dues has been a perpetual issue between the sugar industry and the Uttar Pradesh Power Corporation and the mill owners have, time and again, written to the state government and the cane commissioner to facilitate the timely release of cogeneration dues so as to ease the cane payments, which have as on May 14, reached INR120.26 billion, which is 63.26% of the total cane payments.
With sugar prices nosediving from INR3,700 per quintal in last October, at the beginning of the sugar season, to INR2,600 per quintal at present, millers have been crying foul, stating that it is no longer remunerative to run sugar mills and that the sector in the state is fast turning out to be unviable.
In a fast deteriorating situation, the sector has been literally pushed to the wall, with falling sugar prices on the one hand and bumper cane on the other, and the mills have started panicking as they have no clue where they will get the money from to clear the outstanding dues, more so as bankers have lost confidence in the sector and are refusing to lend them money.
“Dues have already mounted to above INR120 billion now and even if we manage to pay about INR20 billion before the season ends, we would still have more than INR100 billion as opening dues at the beginning of next season. How practical is it to pile up such arrears and how are we expected to pay it off? Has anyone applied their mind to this question?” asks a member of the UP Sugar Millers Association.
While the Centre had recently announced to pay farmers INR55 a tonne of cane to be adjusted against the statutory Fair and Remunerative Price (FRP) of INR255 per tonne linked to 9.5% sugar recovery to offset the mounting arrears by sugar mills, Union food minister Ram Vilas Paswan had in Lucknow stated that the Centre is answerable only towards the payment of the FRP, leaving a huge gap of INR65 per tonne between the FRP and the SAP to be settled by the state government, if it so wishes. While the FRP is linked to recovery, the SAP is not. And that’s where the fault-lines lie, sugar experts said.
“In a situation where we are having great difficulty in staying afloat, it seems highly unlikely that we would be able to clear such heavy dues. In fact, we are incurring heavy losses on every tonne of sugar that we are producing. Yet, we have been told to keep our mills running till the last standing cane in the fields is crushed. We understand the plight of the farmers. But, is there anyone who is even trying to understand our plight?” said a miller.