Even as the sugar refineries are reeling under the impact of the mounting arrears  cane dues of over Rs 12,000 crore ,  the delay in payment of the  power dues of sugar mills by the UP Power corporation limited (UPPCl) have aggravated their woes.   The total installed capacity of the power cogeneration in state sugar mills is 1,053 MW. The bagasse is the fuel for power generation which is supplied to the power grid of UPPCl.

The total power dues of the sugar mills on UPPCl are over Rs 1,000. The UPPCl   recently released Rs 217 crore against the outstanding. The payment was released with the rider that it would be utilized only for the purpose of making payments to the sugar cane farmers.

It may be mentioned that the timely payment of power dues has been a perpetual issue between the sugar industry and the UPPCl and the sugar mill. The mills have time and again, written to the state government and the cane commissioner to facilitate the timely release of cogeneration dues so as to ease the cane payments, which have as on May  29  reached Rs 12,026 crore, which is 63.26% of the total cane payments.

With sugar prices nose-diving from Rs 3,700 per quintal in last October, at the beginning of the cane crushing season  to Rs 2,600 per quintal at present, millers have been crying foul, stating that it is no longer remunerative to run sugar mills and that the  sugar sector in the state is fast turning out to be unviable.

In a fast deteriorating situation, the sector has been literally pushed to the wall, with falling sugar prices on the one hand and bumper cane on the other, and the mills have started panicking as they have no clue where they will get the money from to clear the outstanding dues, more so as bankers have lost confidence in the sector and are refusing to lend them money.

“Dues have already mounted to above Rs 12,000 crore now and even if we manage to pay about Rs 2,000 crore before the season ends, we would still have more than Rs 10,000 crore as opening dues at the beginning of next season. How practical is it to pile up such arrears and how are we expected to pay it offIJ Has anyone applied their mind to this questionIJ” asks a member of the UP Sugar Millers Association (UPSMA) .

While the Centre had recently announced to pay farmers Rs 55 a tonne of cane to be adjusted against the statutory Fair and Remunerative Price (FRP) of Rs 255 per tonne linked to 9.5% sugar recovery to offset the mounting arrears by sugar mills, Union food minister Ram Vilas Paswan had in lucknow  recently stated that the Centre is answerable only towards the payment of the FRP, leaving a huge gap of `65 per tonne between the FRP and the SAP to be settled by the state government, if it so wishes. While the FRP is linked to recovery, the SAP is not. And that’s where the fault-lines lie, sugar experts said.

“In a situation where we are having great difficulty in staying afloat, it seems highly unlikely that we would be able to clear such heavy dues. In fact, we are incurring heavy losses on every tonne of sugar that we are producing. Yet, we have been told to keep our mills running till the last standing cane in the fields is crushed. We understand the plight of the farmers. But, is there anyone who is even trying to understand our plightIJ” said an official of UPSMA.