UP likely to give Rs 20 billion dole to sick government sugar mills

The Yogi Adityanath government in Uttar Pradesh is likely to invest almost Rs 20 billion to revive government sector sugar mills.

While, the government has already approved revival package of Rs 7.15 billion for two UP State Sugar Corporation Limited (UPPSSCL) mills in Gorakhpur and Basti districts, four other units located in Ghazipur, Barabanki, Sitapur and Mathura are in the pipeline.

Each of these four mills would expectedly get at least Rs 3 billion for revival, totalling over Rs 12 billion. Together with Rs 7.15 billion, which the Adityanath government has already allocated for the revival of the two UPSSCL units at Pipraich and Munderwa in Gorakhpur and Basti districts respectively, the sweetener by the regime adds up to about Rs 20 billion.

A highly placed government source told Business Standard the state cabinet is likely to clear the proposal of the revival of these units this week. Apart from the sugarcane crushing facility, each unit would also comprise a cogeneration unit for power generation, both for captive use and export to the state grid.

Earlier, the Adityanath government had provided Rs 4.01 billion for the Gorakhpur unit of 5,000 tonnes of cane crushed per day (TCD) capacity, apart from cogeneration unit of 18 megawatt (mw) and a distillery. This unit had been lying closed since 2008. Besides, Rs 3.14 billion was given to the Basti mill of 5,000 TCD capacity, 18 mw cogeneration facility and a distillery. The unit was closed down in 1999.

At numerous occasions, Adityanath has reiterated to revive government mills in the interest of farmers. In the current 2017-18 crushing season, only one UPSSCL mill is operational. However, the proposed revival of five sick units would take up this number to six in the next crushing season 2018-19.

In 2007, the Mayawati government (2007-12) had taken the decision to privatise 10 operational mills of UPSSCL and 11 defunct units of UP Rajya Chini Evam Ganna Vikas Nigam Ltd (UPRCEGVNL). The 21 units were sold between July 2010 and March 2011 to private companies, including Wave Group.

In its report, Comptroller and Auditor General (CAG) had pointed at anomalies in the sale with regards to the alleged undervaluation of land and plant machinery and lack of competition. The prices received were far lower than expected in 14 of the 21 mills sold during the process, the report hinted.  The successive Akhilesh Yadav government (2012-17) had ordered a probe by the UP Lokayukta in November 2012. However, no action was subsequently taken.

After coming to power in March 2017, the Adityanath government had instituted an inquiry into the alleged loss to the tune of Rs 12 billion in the sale of 21 government mills during the Mayawati regime over the alleged discrepancies in the land and machinery valuation.