UP sugar mills get more time and subsidy

Saddled with sugarcane arrears of almost Rs 5,000 crore, the beleaguered private sugar mills in Uttar Pradesh on Friday got a sugar-coated pill from the Akhilesh Yadav government.

The state cabinet decided to give the mills till September 30 to clear dues. It also gave the mills an additional rebate of Rs 6 a quintal.  Rahul Bhatnagar, principal secretary, sugar industry and cane development, said the “incentive” of Rs 6 a quintal would only be given to the mills settling dues by September 30.

The mills had wanted subsidy of Rs 9 a quintal for the 2013-14 crushing season.

The government had constituted an expert committee to decide on splitting the burden of Rs 9 a quintal between the government and mills. The committee, headed by the Uttar Pradesh agriculture production commissioner, had examined the issue and submitted its report on August 27, recommending that subsidy of Rs 6 a quintal and Rs 3 a quintal be shared by the government and the mills, respectively.

On possible action against erring mills, Bhatnagar declined to elaborate but said action would be taken under the provisions of law.

The Allahabad High Court is hearing a case pertaining to arrears and, in previous sittings, had expressed displeasure over non-payment by mills. The next hearing is scheduled on September 3.

Earlier, the private mills had  told the government crushing would be suspended in the 2014-15 season unless their demands were met. Chief among these were payment of Rs 9 a quintal for the last crushing season and the adoption of a viable and permanent sugarcane pricing formula.

The mills said the widening gap between the state cane prices and sugar prices had wrecked their finances, as the mills had failed to recover the cost of sugar production due to low or non-remunerative revenue realisation, coupled with the high cost of production in India.

Yadav said the government was aware of the problems in the sugar sector. He blamed sugar imports and falling sugar prices for the crisis.

There are 119 sugar mills in Uttar Pradesh, of which 96 mills are in the private sector, 22 in cooperative, and one is in the public sector. The government had made a provision of Rs 400 crore in the budget for the cooperative mills and, as such, the incentive of Rs 6 a quintal would not be applicable to them.

On August 13, the high court had asked Uttar Pradesh mills to start liquidating their sugar stock for clearing cane arrears. The mills were directed to liquidate five per cent of their stock every week for the next three weeks. The court had fixed Rs 3,100 a quintal as the floor price for the sale. Thirty per cent of the realised amount would go towards clearing the dues. The court will decide what to do with the rest.

The government had registered over 60 first information reports and issued recovery certificates on 52 mills.
SUGAR-COATED PILL

• State cabinet gives mills time till September 30 to clear dues
• Government to give additional subsidy of Rs 6 a quintal
• Mills had demanded subsidy of Rs 9 a quintal for 2013-14 crushing season
• ‘Incentive’ of Rs 6 a quintal to be given to mills settling dues by September 30
• Government had constituted an expert panel to decide on splitting the burden of Rs 9 a quintal between the government and the mills