Privatisation of sugar mills in UP hits roadblock

The privatisation programme of the corporation and cooperative sugar mills by the Uttar Pradesh government is getting delayed because of legal hurdles.

"Though we planned to complete the entire privatisation process, including the legal transfer of assets of the mills before the start of the 2007-08 crushing season (October-September) to enable the buyers to begin crushing from the very start. However, it appears now that the privatisation will be completed during the crushing season", said a state government official.

In July, the state government had decided to go ahead with the privatisation or sale of all the 33 mills and 4 distilleries belonging to the UP State Sugar Corporation and its subsidiaries.

It also planned to privatise 28 mills and 3 distilleries of the UP Co-operative Sugar Factories Federation (UPCSFFL). It had appointed Ernst & Young as an advisor for the process.

However, in August the Allahabad High Court had ordered a stay on the privatisation process of 28 sugar mills and 3 distilleries belonging to the UPCSFFL after the privatisation move was challenged by some of the cooperative shareholders.

In its last hearing, the Court has adjourned the case till October 24. The combined crushing capacity of the 28 co-operative mills is 69,125 tonnes crushed daily (tcd), while that of the 33 corporation mills is 51,254.5 tcd. Each of the 7 distilleries has a capacity of 30 kilolitre a day.

Their combined capacity stands at 210 kilolitres a day.