Initially representatives of both the industry associations were asked to solve the issue amicably amongst themselves in such a way that the lifting of reserve molasses and the government’s revenue collection target is not adversely affected.
The Uttar Pradesh government has decided to fix the minimum base price for reserved molasses sold to distillers for manufacturing of country liquor to avoid distress sale by the beleaguered sugar mills. The decision, which is expected to bring relief to the troubled sugar industry, was taken at a joint meeting of representatives of UP Sugar Mill Association and Uttar Pradesh country liquor Distillers Association, chaired jointly by the principal secretary, sugar industry and cane development and principal secretary, excise.
According to the new formula devised by the two principal secretaries, the minimum base price for reserved molasses for the auction will be decided by a reverse calculation of ENA cost and the cost of molasses that has been factored in the pricing of country liquor. Tenders for molasses will be completed by this formula only.
As per the minutes of the meeting, the Sugar Mills Association apprised the government officials that due to the arbitrary rates of molasses quoted in the tenders by distillers in the last couple of years, the financial liquidity of sugar mills has been adversely affected and they are not left with enough funds for making cane price payments. They also apprised the officials that the sugar mills will not be able to supply molasses on such unviable rates in the coming season.
Initially representatives of both the industry associations were asked to solve the issue amicably amongst themselves in such a way that the lifting of reserve molasses and the government’s revenue collection target is not adversely affected. “But since both the parties did not come to any amicable solution on the issue, the Principal Secretary, Sugar Industries and Cane Development and Principal Secretary Excise jointly decided that the minimum reserve price for reserved molasses for auction will be decided by a reverse calculation of the ENA cost and the cost of molasses that is taken for deciding the price of country liquor,” the minutes said, adding that the bidding distillery will not quote the rates below the reserve price fixed by the above formula and sugar mills will have to deliver the molasses to those successful bidder who have quoted equal to or more them reserve price. It was also directed that if any of the two industries deliberately tried to create any disturbance in the system, strict action will be taken against them.
The government’s move is being perceived as bad news for the country liquor industry in the state, which has become used to buying reserved molasses from the sugar industry at arbitrary, throwaway prices.