In addition to earlier freebies like offering distillery licences to produce industrial alcohol and ethanol to bidders for the UP Sugar Corporation and Cooperative Federation sugar mills, the Uttar Pradesh government has now decided to reveal the expected sale price of the mills along with the VRS amount payable to the employees, as per the 6th Pay Committee recommendations.
In 2008-09 a total of 20 mills in the state, which have distilleries, produced 4,150 lakh litre of ethanol. With new licences being handed out along with the mills that have been put on the block, the state is also seeking increased ethanol production.
The state has also given in to the bidders? demand to extend the last date for submitting financial bids for the cooperative mills from August 21 to August 28, so that they can arrange for the financial guarantee of Rs 1 crore. The government has also decided to invoke the Swiss challenge method for bidding, in which the proposing party has the first right of refusal. Under the new provision, the government may apply the Swiss challenge method in case the highest bid received is below the reserve/expected price but above 50% of the reserve/expected price of the units on offer for disinvestments. This highest bid would continue to remain valid till the conclusion of the process. Fresh bids will then be invited to challenge the original highest bidder under exactly the same terms and conditions as were applicable in the original bidding along with the disclosure of highest financial bid received, officials said. This will mean that in order to be considered, all fresh bids will have to be higher than the ?original highest bid?.
However, the ?original highest bidder? will have the right of first refusal?the opportunity to match the highest bid under the fresh process within 15 days. If the ?original highest bidder? does not use this option and the highest bidder in the fresh process refuses to honour his bid, his bid security will be forfeited, they added.
In case no fresh bid is received to challenge the ?original highest bid?, the government may consider awarding the contract/assignment at the price quoted in this bid, despite it being lower than the reserve/expected price, officials said.
According to sources, the state?s flexibility in catering to the demands of the bidders is due to the fact that they want the process of disinvestment in the sugar sector to be completed before the start of the next crushing season and these steps are aimed at enhancing the possibility of disinvestments.
?Many of the state government?s earlier policies have been changed to suit the requirements of the private sector, only so that the process of disinvestments does not get derailed again. In fact, this goes to show that the government is bent on getting rid of the ailing sugar mills that are bleeding the state exchequer of Rs 900 crore annually,? said an official. Apart from this, the bidders have also got a guarantee from the state that the reserved cane area would not be changed for five years.
The last date for submitting financial bids for the 11 Sugar Corporation mills is August 22, after which the slump sale agreement will be signed with the highest bidder within a fortnight along with handing over the possession of the unit. This would mean that the new owners of the mills will get its possession by mid-September and thus, will have time to renovate the mill before starting crushing operations in October.
