Under its plan to rejuvenate the ailing sugar industry of the state, the Punjab government is making arrangements to re-open distilleries attached to one sugar mill each in Gurdaspur, Nawanshahr and Nakodar.
These distilleries are to be handed over to private players on 'built, operate and transfer' (BOT) basis. The private parties would pay back a fixed amount to the Punjab state federation of cooperative sugar mills (Sugarfed).
The Gurdaspur and Nakodar sugar mills have licences to manufacture industrial alcohol, while the Nakodar mill also has the licence for a bottling plant to manufacture country-made liquor and Indian-made foreign liquor (IMFL).
There are nine mills in the cooperative sector which are managed by Sugarfed. These are under huge debt and losses, making the industry unviable. "Our effort is to get things rolling in the sugar industry and try to generate revenue from all possible sources," said financial commissioner (cooperation) SK Sandhu.
The Gurdaspur mill has a distillery with a capacity of 20 kilolitres per day, with expected earnings of Rs 1 crore per year. The Nakodar mill has the capacity to manufacture 36 kilolitres of country-made liquor per day and 16 kilolitres of IMFL per day, which would fetch Sugarfed Rs 1.3 crore annually. The Nawanshahr mill distillery is expected to fetch an annual revenue of Rs 50 lakh.
As per a report by consultants, the revival of Gurdaspur, Nawanshahr and Nakodar distilleries requires an expenditure of Rs 33 crore, Rs 62 crore and Rs 69 crore, respectively.
The state government has also decided to allow the sale of molasses (a byproduct of sugar) to other states; till recently, it was being sold only to distilleries within the state. "We are earning Rs 32 crore annually from the sale of molasses. Allowing its sale to distilleries in others states is expected to increase earnings by 15-20%," said a Sugarfed officer.
"The nine mills in the cooperative sector together manufacture 400 quintals of molasses every year," said Sugarfed general manager MP Singh.
The sugar industry's losses have mounted to an all-time-high as sugar prices have hit a six-year low, even as input costs, especially of sugarcane, have gone up consistently. The fall in local sugar prices is straining the finances of mills, which have failed to make timely payments to cane farmers. Mills owe farmers about Rs 280 crore. These are under losses of Rs 750 crore, while their debt burden is Rs 450 crore.