Stalemate continues over PPAs between Maharashtra government, sugar mills

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Pune | Published: November 28, 2017 3:48:10 AM

A meeting between Maharashtra chief minister Devendra Fadnavis and Nationalist Congress Party (NCP) chief Sharad Pawar, also the chairman of Vasantdada Sugar Institute (VSI) to find a solution to the power woes of the state’s sugar sector, ended in a stalemate.

PPAs, Maharashtra government, sugar mills, Stalemate, Devendra Fadnavis, Sharad Pawar, Vasantdada Sugar InstituteA meeting between Maharashtra chief minister Devendra Fadnavis and Nationalist Congress Party (NCP) chief Sharad Pawar, also the chairman of Vasantdada Sugar Institute (VSI) to find a solution to the power woes of the state’s sugar sector, ended in a stalemate.

A meeting between Maharashtra chief minister Devendra Fadnavis and Nationalist Congress Party (NCP) chief Sharad Pawar, also the chairman of Vasantdada Sugar Institute (VSI) to find a solution to the power woes of the state’s sugar sector, ended in a stalemate. While top officials of Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) claimed that the CM has agreed in-principle to ink power purchase agreements (PPAs) with millers for their co-generation projects and issued instructions for going ahead with the PPAs, the state’s cooperation minister Subhash Deshmukh says that while there is no dispute over signing of PPAs, the rate for power continues to remain a major hurdle. Millers have been demanding rates as high as Rs 6.50 per unit which is not acceptable, he said. Fadnavis had earlier assured the sugar industry of speeding up the process of purchasing electricity produced by the co-generation units. However, he has been asking millers to be prepared for a probable downward revision in the purchase price of power.

“Seek fair rates because there are several proposals waiting in the pipeline offering power at rates as cheap as Rs 2.38 per unit without any investment from the government,” he had said. Deshmukh has been asking sugar millers to seek fair rates for power for their co-generation projects instead of demanding rates as high as Rs 6.50 per unit. Sugar millers in the state have set up these co-generation plants with an investment of about Rs 2,500 crore. The objective was to supplement their revenue with income from by-products as price of sugarcane and sugar is controlled by government. “The rate is the main hitch. Unless the rate is finalised, there is no question of going ahead with the agreements,” he clarified.

According to him, millers have 265 MW power and the demand is for some 300 MW. Shivajirao Nagwade, chairman of the cooperative sugar millers federation said that the CM has been positive on signing PPAs with the mills but the rate is yet to be decided. “He has given go-ahead for the purchase agreements and the rate may be included when the issue is finalised. The sugar mills are ready for a rate of Rs 5.85 per unit,” he said. Nagwade said the millers have 172 MW of surplus power for export.

Earlier, Western India Sugar Mills Association (WISMA) chairman BB Thombare had said that the PPAs have been pending for the last couple of years. “The mills have been seeking rates of Rs 6.35 per unit to `6.50 per unit but the government is holding back and is offering a rate of Rs 4.30 per unit. This is not affordable at all as mills will be unable to pay off even the interest on their projects. The cost of production per unit comes up to Rs 6.50 per unit and the season in the state is less than 100 days which does not make it cost effective,” he had said. The state government has not renewed the power purchase agreements (PPA) with the sugar mills, which have invested heavily to set up the co-generation units.

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