Power from co-ops will only help sugar barons

You will soon be paying to set up a power plant in 55 cooperative sugar factories but there is little you will gain.

You will soon be paying to set up a power plant in 55 cooperative sugar factories but there is little you will gain.

HT Image

Maharashtra’s sugar barons-—mostly politicians in power—towards the end of 2009 amended the law to allow them to sell 50 per cent of electricity their sugar factories produce in the open market anywhere in India.

The remaining 50 per cent has to be sold within Maharashtra, but not necessarily to the state-owned Maharashtra State Electricity Distribution Company Limited.

The Maharashtra Electricity Regulatory Commission has also hiked power tariff by 57 per cent from Rs 3.05 to Rs 4.79.

To top this, the state will use taxpayers’ money to bear 95 per cent of the cost of setting up these power plants. The investment in cogeneration for 55 sugar mills is Rs 5,000 crore. This is how the cogeneration plant will be funded — 5 per cent from shareholders of the factory, 5 per cent (non-refundable) from state government, 30 per cent from the Sugar Development Fund and 60 per cent from other financial agencies.

“The loan given to sugar factories, will come from the Sugar Development Fund at confessional rates while the state government’s 5 per cent fund is non-refundable,” said Sugar Commissioner Rajendra Chavan.

Cooperatives Minister Harshavardhan Patil, whose sugar factory is one of these 55, said: “Currently, we are looking to bridge the shortfall in electricity. The electricity produced by these sugar mills will help meet the shortfall.”

Eleven of these have started producing 121 MW of electricity.

Consumer groups, however, have raised objections saying this is only going to benefit powerful politicians.

Vivek Velankar, president of consumer body Sajag Nagarik Manch, said: “These sugar mills are operating a racket. First, they obtained facilities from the government under the name of cogeneration. And now they are ready for business, at the expense of the common man”.

Shantanu Dixit, founding member of Prayas Energy Group said: “Neither MERC nor the government conducted any hearing and took us into confidence before this decision. We will raise this issue in the next MERC hearing when rates will be revised.”

Patil, however, denied that the move was against public interest. “Presently, we have no electricity. Our priority is to get power and once it is available, the rates will stabilise.”