Maharashtra govt mulls 10-yr soft loan to revive 30 closed co-op sugar mills

Move necessary to handle surge in cane output expected in coming season.

The Maharashtra government is considering a 10-year soft loan to revive 30 closed cooperative sugar mills before the start of the 2010-11 cane-crushing season.

For the next season, the projected availability of sugarcane is a record 75 million tonnes, which can produce 8.5 mt sugar. The government believes excess cane crop can’t be processed if these closed mills aren’t brought back into operation.

The government has formed a committee chaired by the principal secretary (cooperation). Its report will go to the state cabinet. A committee has already listed mills that have sufficient cane in their operational areas and have been closed for the last two seasons.

A senior state government official, on condition of anonymity, told Business Standard, “The Maharashtra State Cooperative Bank (MSCB) has been asked to prepare a detailed plan on how the 10-year soft loan will be provided. The bank will also be asked to take a flexible approach on additional funding to these mills. Similarly, labour unions will be urged not to press for payment of dues till these mills are revived fully. The idea is that the entire cane should be crushed so that the government does not have to pay any compensation for uncrushed cane.” During 2009-10, he said, against the earlier projection of 41 mt cane and 4.8 mt sugar production, mills would crush 62 mt cane to produce 7.2 mt sugar.

According to the official, the revival of these mills was essential as further surge in production was expected. Adding: “The stakeholders in this, the Federation of Cooperative Sugar Factories in Maharashtra, the Vasantdada Sugar Institute and MSCB have been asked to come out with clear suggestions and an action plan, to be incorporated in the cabinet note being prepared by the cooperation department.”

The official added the move was initiated by Cooperation Minister Harshvardhan Patil, who felt reviving idle capacity would give the industry a new lease of life. Industry sources it was likely the crushing season would be advanced to October 1 from November 1. Sources said the state government had already indicated its consent in this regard. A ministers’ committee chaired by the chief minister is meeting on June 14 to review the situation.