In another setback to the Uttar Pradesh government’s efforts at divestment, only one firm infrastructure major, Gammon, has submitted financial bid for buying the ailing Uttar Pradesh State Sugar Corporation mills.

Five companies — Gammon, Dalmia, Era, Chaddha and Noida-based Uflex — had submitted expressions of interests (EoIs) in accordance with the modified terms and conditions in July this year.

Dalmia Group owns three units at Ramgarh and Jawaharpur (Sitapur district) and Nigohi (Shahjahanpur).

On July 4, the Uttar Pradesh government had invited fresh expressions of interests (EoIs) after the earlier process was scrapped and the EoIs were opened on July 18.

Now, a high-level committee headed by the state chief secretary will decide whether to extend the last date of filing the financial bids or cancel the whole process and seek fresh EoIs.

Earlier, five companies, including Bajaj Hindusthan and Dalmia had submitted EoIs for the units. However on July 4, the state government rejected all the five bids and invited fresh EoIs with modified terms and conditions.

The bids were cancelled since recovery certificates (RCs) had been issued against some of the bidding companies, besides other anomalies were also detected.

UP government on June 4, 2007 had decided to privatise all 59 sugar mills, 31 in public sector and 28 of the UP Cooperative sugar factories federation along with seven distilleries. This process was targeted to be completed by August 30 same years. The privatisation process has now been delayed by a year and it still hangs in balance with no chance of the completion of the privatisation before the commencement of the next cane crushing season from October next.

The accumulated loss of the PSU sugar mills was around Rs 2,000 crore. In 2007-08, the state government has provided a budgetary grant of Rs 200 crore to the sugar corporation while the corporation owes as much as Rs 246 crore to the sugar cane growers for the current cane crushing season 2007-08.

The previous Mulayam Singh Yadav government in 2003, had decided to privatise 24 sugar mills of the UP sugar Corporation. The move was mired in controversy as all the mills were proposed to be handed over to a particular industrial house which has now emerged as the largest Sugar producer of the country. The decision to privatise these mills was taken in June 2007. Most of these sugar mills also carry substantial liabilities of payments and farmers' dues.

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