UP sugar industry free to trade cogenerated power

The Uttar Pradesh sugar industry has sought Uttar Pradesh Electricity Regulatory Commission’s permission to sell cogene-rated power in the open market, to private traders and users. The UP sugar industry sells around 700MW of power to the state.

Presently, sugar mills can sell the power produced from bagasse to the state grid for around Rs 3.10 per unit while the realisation from open market sale is in the range of Rs 6-7 a unit.

Sugar mills in states like Karnataka and Tamil Nadu are allowed to sell surplus power to private consumers. The UP Cogen Association, an apex body of the mills who have cogeneration facilities, has approached the commission on behalf of its members.

“The price of sugarcane (the source of bagasse) has almost doubled since the mills began signing power pur-chase agreements with the Uttar Pradesh Power Corporation in 2002-03 while the price of power has increased only marginally.

Mills should have the option to sell to a third party for better realisation,” said industry sources. Sugar mills use bagasse (a by-product) to produce power.

The grant of open access would benefit companies who are have large cogeneration capacities such as Balrampur Chini Mills (115 MW), Bajaj Hindusthan (90 MW), Dhampur Sugar (80 MW) and Triveni Engineering (44 MW) among others.

Notably, the UP sugar industry has been in trouble for the last two years owing to the high cost of sugar production and low realisation from sugar, their main business segment. Top producers like Bajaj Hindusthan and Balrampur Chini have incurred huge losses.

The industry has been in a tug of war with the state government in recent times over the issue of sugarcane price.

For the last two years, it has successfully challenged the state determined sugarcane price at the Allahabad High Court and the Supreme Court. A higher realisation from the power segment would improve the financial condition of the industry.