The winds of privatisation in Uttar Pradesh?s sugar industry finally seem to be blowing hard. Propelled by the huge presence of private companies at the pre-bid meeting in New Delhi for the disinvestment of sugar mills in UP State Sugar Corporation and UP Cooperative Sugar factories Federation, the Uttar Pradesh government is hoping that its third endeavor will reap rich dividends.
While almost 60 bidders from all over the country turned up for the Sugar Cooperative meet, around 39 bidders were present for the Sugar Corporation meet, which included big names like Birla Sugar, Dalmia group, Simbholi Sugar, Dhampur Sugar, Dwarikesh Sugar, Uttam Sugar, Treveni Sugar, Modi Sugar, JK Sugar, Kanoria Sugar, Parle, Shri Renuka Sugars, Mawana Sugar, Dalmia Cement, Indian Oil Corp, Indian Potash Ltd, Indian Sucrose, Anjani Steel and Wave Industries.
The Mayawati government has invited fresh expressions of interest and requests for qualification for 11 operating units of the state-run UPSSCL and 24 UPSFF sugar mills after having failed in the last two attempts.
Talking to FE , a senior official of the cane department said that the response at the pre-bid meeting was overwhelming and the government hopes the mills would change hands before the beginning of the next cane crushing season. ?The bidders put forth their views and queries at the meet and wanted some sort of a guarantee and assurance from the government that the cane area would not be changed for the next five years, which was entirely accepted. They also wanted the last date for the submission of bids to be extended but this was refused, since a delay would mean that we miss the next season,? said an official.
While the last date for submitting the RFQ for the Cooperative Sugar Mills is July 17, the deadline for submitting financial bids is August 21. For Sugar Corporation mills, the last date of submission of the RFQ is July 21 and the deadline for submission of financial bids is August 18.
According to sources, with the government set on the path of fiscal correction, it was decided that sectors which bleed the state exchequer most should be passed on to the private sector. The sugar sector in Uttar Pradesh is the most politically volatile and sensitive one, due to which the state government, in its overzealousness, ends up paying extra than any other state. Speaking to FE , a state government official revealed that every year the state exchequer ends up with a loss of almost Rs 700 crore due to sugarcane pricing alone. ?Uttar Pradesh is probably the only state which pays very high rates to sugarcane farmers.
Apart from the pricing of sugar, the fact that many of the sugar mills, belonging both to the State Sugar Corporation, as well as the Co-operative sector, are old and loss-making and face the problem of overstaffing, add to huge losses incurred by the state. ?A total loss of over Rs 850 crore is incurred by the sugar sector alone,? revealed the official.
The Mayawati government had made an attempt to disinvest all units of UPSSCL and UPSFF and had also invited bids from private investors last year but the move failed as most of the prices quoted by companies was very low. The government has, since then, changed its policies and instead of bulk selling, it has decided to put up individual units for sale. For instance, if a private investor wants to buy only one unit, he will be able to apply for the same. So instead of selling all the 33 units of Sugar Corporation mills, disinvestment of only 11 profit-making units will be done in the first phase. These units include Amroha, Bijnore, Bulandshahr, Chandpur, Jarwal Road , Mohiuddinpur, Saharanpur , Sakautitanda, Rohanakalan, Siswa Bazar and Khadda.
Among UPSSFF units, the official said, it had been decided to exclude those sugar mills, which are caught up in litigation, so as to make the offer more lucrative. ?There are four units, including Dhuriyapar, Majhola, Morna and Nanauta, for which cases had been filed by stakeholder farmers and therefore these sugar mills have not been included in the list,? the official added. The completion of this process may usher in total privatisation of the sugar industry in the country?s second largest sugar-producing state.