Sugar mills urge UPPCL to clear Rs 1,150-crore dues of power generators

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Published: April 25, 2020 2:45 AM

In a letter to UPPCL chairman Arvind Kumar, Uttar Pradesh Sugar Millers Association secretary general Deepak Guptara has drawn attention towards the precarious financial condition of the state sugar industry at present and its deepening crisis.

Stating that sugarcane crushing is still going on, Guptara said the mills have the statutory liability to settle the cane dues within 14 days and the amount of cane dues payable is increasing day by day.Stating that sugarcane crushing is still going on, Guptara said the mills have the statutory liability to settle the cane dues within 14 days and the amount of cane dues payable is increasing day by day.

The Uttar Pradesh sugar industry, which is already grappling with a liquidity crunch because of poor sales, weak molasses and ethanol offtake, and non-existent exports, has asked Uttar Pradesh Power Corporation (UPPCL) to clear its power co-generation dues of Rs 1,157 crore as on April 22 so that the sugar mills can clear their dues to farmers. These power dues have been accumulating since March 2019.

In a letter to UPPCL chairman Arvind Kumar, Uttar Pradesh Sugar Millers Association secretary general Deepak Guptara has drawn attention towards the precarious financial condition of the state sugar industry at present and its deepening crisis.

“The gravity of the situation can be gauged by the fact that sale of sugar is extremely poor. As almost 70% of domestic sale is driven by institutional demand, which has almost dried up owing to lockdown in the country, the situation can be easily understood. Added to that is the fact that exports are not happening and ethanol offtake has also slowed down considerably owing to very low consumption of petrol and limited storage capacity with the oil marketing companies,” he has written.

Stating that sugarcane crushing is still going on, Guptara said the mills have the statutory liability to settle the cane dues within 14 days and the amount of cane dues payable is increasing day by day.

“Besides the logistical problems with regard to storage of sugar and allied products, these factors have put a severe strain on the liquidity position of sugar millers, which has further impaired their cane price-paying ability. With working capital limits for most of the mills having being fully utilised, the sugar millers are finding it very difficult to meet their cane price payment obligation, for which constant pressure is exerted from both farmers and the state government,” he wrote.

Highlighting the government’s intentions to infuse liquidity into the sector in light of the pandemic and the resultant lockdown that will improve the financial condition of discoms to pay off dues to power generators, Guptara said with the implementation of these measures, the availability of working capital with UPPCL would stand augmented. “Hence arrangements must be made for the immediate release of payment to millers for outstanding dues against power export so that they can pay to the farmers in these difficult times.”

Sugar principal secretary and cane development Sanjay Bhoosreddy, too, has written to energy principal secretary and UPPCL chairman, urging to clear the cogen dues at the earliest, as it is holding up mills from paying farmers their cane price.

Despite repeated attempts to contact the UPPCL chairman, the calls went unanswered.

As many as 21 sugar groups have a combined outstanding of Rs 1,157 crore against the power that they have exported to UPPCL. Of this, the largest amount is that of Balrampur Chini Mills, having a bill of Rs 175 crore, followed by Dhampur Sugar, with Rs 135 crore, DSCL with Rs 121 crores, etc.

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