UP sugar mills demand Rs 1,000 crore power dues to pay cane farmers

Uttar Pradesh private sugar mills have urged the Yogi Adityanath government for an early settlement of power dues on the state power utility, amounting to nearly Rs 1,000 crore, to reduce their cane liabilities of Rs 4,500 crore. 

Apart from producing sugar, some UP private millers also cogenerate electricity, both for their captive use, and selling to UP Power Corporation Limited (UPPCL) at fixed tariffs during the crushing season. 

However, power dues to the tune of Rs 1,000 crore are still pending on UPPCL even as the combined cane farmers' arrears pertaining to 2018-19 crushing season on millers stand firm at more than Rs 4,500 crore. 

"We are following up on our power outstanding with the state authorities, yet the payments have yet not materialised. This money would be used to pay farmers and will reduce our cane liabilities to that extent," a sugar industry official told Business Standard today on condition of anonymity. 

Recently, chief minister Yogi Adityanath had also referred to the pending power dues and said it would be settled at the earliest for the benefit of sugarcane farmers.

Meanwhile, the state government has filed first information report (FIR) against two sugar mills owned by Simbhaoli and Modi groups for defaulting on cane payments. The action was taken under section 3/7 of Essential Commodities Act (ECA) 1955, according to UP cane commissioner Sanjay Bhoosreddy. 

He said action was also being taken against other mills over their sluggish payment ratio to farmers and the situation is being reviewed on a daily basis, since the 2019-20 crushing season is hardly 2-3 weeks away. 

So far, 53 of total 119 sugar mills in UP had settled their full cane liabilities, including units belonging to Balrampur, Birla, Dalmia, Triveni, DSCL etc. Besides, 33 other mills had notched up payment percentage of over 80%.

In fact, the Adityanath government is likely to seek higher monthly sale quota for the state mills. Currently, the quota stands at about 700,000 tonnes a month, which is reckoned as impeding the capacity of private millers to pay farmers. 

Of total payables of Rs 33,048 crore for 2018-19 season, arrears currently top Rs 4,519 crore. Of these, private mills account for the bulk of nearly Rs 4,200 crore, followed by government controlled cooperative mills and an UP State Sugar Corporation Limited (UPSSCL) mill. 

Recently, UP sugarcane development and sugar industries minister Suresh Rana had asserted the government was targetting to ensure 100% settlement of arrears by the end of October. 

In 2018-19 season, 119 state mills, including 94 private, 24 cooperative and a UPSSCL unit, had participated in the crushing operations. The state sugar output stood at about 11.8 million tonnes (MT) compared to over 12 MT in 2017-18. This year, the state expects 121 mills to crush.