The impasse between the Maharashtra government and sugar millers on Power Purchase Agreements (PPAs) for co-generation projects continues. Maharashtra cooperation minister Subhash Deshmukh has asked the 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 the income from by-products as the price of sugarcane and sugar is controlled by the government.

Western India Sugar Mills Association (WISMA) chairman BB Thombare 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 Rs 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 said.

Deshmukh, who was interacting with the millers at the AGM of WISMA in Pune, asked the millers to bring up the issue at the upcoming cabinet ministers meeting before the CM but did not promise much. He cautioned millers to be prepared to come down in terms of rates. “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 said.

Maharashtra chief minister Devendra Fadanvis had earlier assured the sugar industry of speeding up the process of purchasing electricity produced by the co-generation units. However, he asked the mill owners to get ready for a probable downward revision in the purchase price of the power.