Sugar co-ops urged to use Centre's funds

Union Agriculture Minister Sharad Pawar has urged the sugar co-operatives in Maharashtra to use the Central government's sugar development fund (SDF) for setting up their co-generation facilities.

He was speaking at a function organised to launch venture capital fund Urjankur Nidihi promoted by the government of Maharashtra and IL&FS for non-conventional energy sector.

"Among the proposals received for financing of co-generation projects under SDF, nearly 94 per cent are from private sector and only 6 per cent are from the co-operative sector," he said.

"There is no other fund which offers loans at 4 per cent interest with total repayment period of eight years. Sugar co-operatives can use these funds as equity for co-generation projects which will be under taken under Urjankur Nidhi," he pointed out.

Speaking at the function, the state minister for non-conventional energy, Vinay Kore said, "Under Urjankur Nidhi, we plan to finance all kinds of non-conventional energy projects like co-generation projects, wind energy projects, generating power from solid waste, tidal waves, etc. But in the first phase, we will give emphasis on financing the co-generation projects of sugar co-operatives."

"Maharashtra has the potential of generating 1250 Mw power from co-generation projects and this will bring an additional Rs 600 crore to Rs 900 crore income for the state's farmers," he said.

The Maharashtra Government will invest Rs 218 crore in the fund over a period of three years, IL&FS will pump in Rs 200 crore over the same period and besides this, IL&FS will also raise around Rs 2,500 crore from the market.

The fund will have three trustees from the state government which include the non-conventional energy minister who will also be the ex-officio chairman of the fund, finance secretary and energy secretary.

IL&FS can nominate two representatives on the board. Two independents will be also appointed as trustees of the fund. The fund will be registered with the SEBI.

The fund will provide 100 per cent finance to co-generation and other renewable energy projects, depending upon their viability. 20 per cent of the fund will be in the form of equity and the rest will be loan, said Kore.

A special purpose vehicle will be created for the co-generation projects and the power generation facilities would be handed over to the co-operatives after 12 years.

However if sugar-co operatives bring their equity then they will have the option to get power generation plant back in lesser period or higher return on their raw material (bagasse), Kore said.