Sugar companies cash in on power tariff bonanza

The Uttar Pradesh-based sugar companies are in a hurry to cash in on revised power tariffs. Most of them are converting bagasse fire boilers to multiple fuel boilers to double the revenues from power generation.

So far, sugar mills have been using only bagasse (a byproduct) to produce power, which they use for captive purpose as well as for sale to the state power corporation.

Recently, the state government revised the average tariff for non-conventional power by over 30 per cent to Rs 3.90-4.10 a unit. It also allowed mills a flexibility to shift to coal for power generation from bagasse. Mills have been given access to sell power in the open market as well.

Balrampur Chini Mills, the country’s second biggest producer, is in the process of converting the boilers at its various power generating facilities to mutli-fuel boilers, said Vivek Saraogi, managing director. The company has a saleable power surplus of 115 Mw most of which is supplied to the state power corporation.

Dhampur Sugars has also installed multiple fuel boilers at its two sugar mills. “The supply of bagasse is limited since it depends on the volume of sugarcane crushed. Consequently, we could run our power plants only for 160-170 days annually. With the option of coal, the number of operational days gets doubled,” said Arhant Jain, president (Finance) at Dhampur. The company has an exportable power surplus of 80 Mw. On an average, 1 Mw yields revenue of around Rs 1.3 crore if the power facility runs for 160 days. If this can run for 330 days, the revenue will jump to Rs 2.7 crore.

Simbhaoli Sugars has also switched to multiple fuel boilers. “Though the margin from the coal-based generation will be slightly lower compared to the bagasse-based power, it still remains a profitable proposition,” said Sanjay Tapriya, director (Finance) at Simbhaoli, which has a surplus power of 30Mw.

While most of these companies are currently using bagasse as a raw material for power production (since the sugarcane crushing is on), the conversion will help when the bagasse is exhausted by March-April.

Nikhil Sawhney of Triveni Engineering said the company would evaluate it since the incremental cost of shifting to multiple-fuel boiler is nominal. He, however, added that the availability of coal through various sources needs to be assessed. Triveni has 45 Mw of surplus power.