By Preeti Bhagat
NEW DELHI – Sugar mills in Uttar Pradesh have asked the state and central government to release around 25 bln rupees of pending power dues, and export and buffer stock subsidy so that they can make timely payment of cane dues, two industry sources said.
Mills in the state owe 3.84 bln rupees as cues dues to farmers for 2018-19 (Oct-Sep), and another 81.43 bln rupees for the ongoing season, data from the Uttar Pradesh Sugar Mills Association showed.
"On one hand, mills are under pressure to clear their cane dues; on the other, the industry is yet to receive the committed amount," one of the officials said.
The Centre is yet to pay part of the subsidy payable to sugar mills on exports in 2018-19. The government had fixed an export target of 5 mln tn exports last season, offering a subsidy of 45 bln rupees.
"Despite being away from the port, exports have been undertaken and at a considerable cost… considerable time has passed but committed subsidies remain unpaid," another official said.
Mills require government support to fill the price gap as domestic prices are higher than international sugar prices.
Extremely slow and late disbursal of government funds has discouraged mills from exporting sugar in the current season due to their tight finances as they are not confident of receiving subsidy for the current season when the previous season's payments are so delayed, an official with a mill based in Uttar Pradesh said.
For the current sugar year, the government is providing 62.7 bln rupees as subsidy to mills to export 6 mln tn sugar. Each kilogram of sugar exported is entitled to a subsidy of 10.45 rupees.
Apart from export subsidies, the government is yet to pay buffer stock subsidy for 2018-19 (Aug-Jul) and 2019-20.
The government had approved creation of buffer stock of 3 mln tn sugar in 2018-19 at a subsidy of 11.75 bln rupees. For 2019-20, it had approved creation of 4 mln tn buffer at 16.7 bln rupees.
The state government has also failed to pay around 10 bln rupees for power purchased from mills by Uttar Pradesh Power Corp Ltd.