Senior ministers of the UPA government got into firefighting mode, working behind the scenes on Thursday to approve critical changes in the sugarcane ordinance issued last month. The ordinance has almost led the Centre into a collision course with the states.

According to top UPA sources, the ordinance, that was brought in to sidestep financial liability to the tune of Rs 14,000 crore in the wake of a Supreme Court order on awarding compensation to sugarcane growers, achieved its purpose. But an oversight in its drafting appeared to have transferred this liability to the states.

This aspect was pointed out in the government on Thursday morning by one of the senior ministers, who maintained that unless changes were made in the ordinance, the states could end up having to take responsibility for the difference in compensation sugarcane mill owners must pay to farmers.

The ordinance issued on October 21 through a gazette notification and given ex post approval on October 29 by the Union cabinet states: ?If any authority or state government fixes any price above the fair and remunerative price fixed by the central government under clause 3, such authority or state government, shall pay the amount, which it fixes above the fair and remunerative price as fixed by the central government, to the grower of sugarcane or to the sugarcane growers cooperative society, as the case may be?.

The ordinance, in its preamble, also says that the state governments announcing higher pricing of levy sugar than that by the Centre would have to bear the extra cost. It says: ?And whereas it has become necessary to clarify for certainty and to have a uniform policy and factors to be taken into consideration for the determination of price of levy sugar and also to clarify that state governments declaring the SAP also bear the additional expenditure connected thereto insofar as the impact on price of levy sugar in respect of sugar factories located in those states concerned.?

This means that the state government can no longer announce an SAP (state advisory price) for sugarcane higher than the FRP announced by the Centre, unless it is willing to shell out the difference from its own exchequer. States like Uttar Pradesh have always announced higher SAPs bowing to popular sentiment.

This year, UP announced an SAP of Rs 170 per quintal compared to the Rs 129 announced by the Centre last month. Chief Minister Mayawati wrote to Prime Minister Manmohan Singh on October 30 demanding that the existing system of SAP pricing be allowed to continue.

Government sources indicated that the fresh amendments in the sugarcane ordinance would mean ensuring that the liability did not transfer to the states. One of the ways, it was suggested, was to delete references to ?state governments? in the ordinance.

Attorney general Goolam Vahanvati, solicitor general Gopal Subramaniam and former law secretary and now advisor to law minister TK Vishwanathan were among those who participated in meetings attended by finance minister Pranab Mukherjee, home minister P Chidambaram, agriculture minister Sharad Pawar and law minister Veerappa Moily to try and resolve the issue. The ordinance was listed in today?s list of business in the Lok Sabha to be passed as the Essential Commodities (Amendment and Validation) Bill 2009.