Mrashtra plan to add 1,000mw in five years may not take-off

Written by Sanjay Jog | Mumbai | Updated: Jan 28 2008, 05:59am hrs
The Maharashtra governments ambitious plan to add at least 1,000 mw in the next five years by encouraging cooperative sugar mills to set up co-generation projects is likely to be a non-starter. Though cooperative sugar factories have been covered under various packages announced by the Centre and the state, they are still bleeding. In all, there are 165 cooperative sugar factories and 24 private mills with an annual cane crushing capacity of 800 lakh tonne.

Cooperative sector sources told FE, It is mandatory for cooperatives to bring in 10% equity in the special purpose vehicle while 30% equity will come from the government and 60% as loans from financial institutions without guarantees. The state government has projected a total cost of Rs 4,500 crore in which the governments contribution will be Rs 1,350 crore.The policy envisages that cooperatives can go in for loan from the Centres Sugar Development Fund (SDF) with 4% interest rate. However, cooperatives have expressed their inability to contribute 10% equity and avail loan from SDF without state government guarantee.

Cooperatives have demanded that the government give a 10-year loan as equity assistance. However, the state finance department has opposed this proposal on the grounds that it is the conscious policy of the government not to extend such assistance to sugar factory by-products.

Cooperatives would soon approach the government with a plea to amend its policy whereby they should be entitled for availing 20% from the Urjankur Fund. Besides, the government should give them a guarantee to go in for loan from SDF at 4% interest rate. The government has already set up Urjankur Nidhi Trust. The amount available from green cess is channelised in this trust, with almost equal contribution by the Infrastructure Leasing & Financial Services.

The state finance department has been critical about equity funding to cooperative projects. The department has already struck down the cooperative departments proposal to create a revolving fund.