Sweet revival to closed sugar mills across Bihar

PATNA: During his recent Seva Yatra to East Champaran (Motihari) district, CM Nitish Kumar took time off to visit Sugauli sugar mill. This was one of the two sugar mills of Bihar State Sugar Development Corporation (BSSDC) in the district which was closed. The Hindustan Petro Chemicals Limited (HPCL) bought it four years ago through open bidding process and started production in December last. The other sugar mill in the district is located at Lauria. It is also being run by the HPCL.

The CM, of course, was not only satisfied, but also elated. The reason is obvious. Soon after coming to power in November 2005, he had made his intentions clear to revive the state's 15 closed sugar mills under the BSSDC. However, to make it viable, the government envisaged that the sugar mills, after being sold to the prospective bidders, would go in for independent production of ethanol, or as the investors would deem it proper.

That option got investors interested in the revival of closed sugar mills and proposals, too, started coming. Accordingly, Bihar State Sugar Mills Act was amended in 2007 to facilitate independent production of ethanol. The Amendment Bill was sent to President Pratibha S Patil for approval, but the presidential consent is still awaited. Union agriculture minister Sharad Pawar, in the meantime, fearing a large-scale shift from cultivation of food crops to cash crops, brought out Cane Control Order that prohibited independent production of ethanol at sugar mills in the country. For Bihar government, rather CM Nitish, sugar acquired bitter taste.

Things, however, turned for the better when HPCL, a central government undertaking, secured the bids for the two sugar mills at Lauria and Sugauli in 2008 after paying the bid money of Rs 95 crore, backed by a project proposal of Rs 700 crore, to produce sugar, power and methanol. It was the outcome of the first of the tenders floated by the industries department in 2008. Nitish's dream had stated finding it feet. And it showed during his visit to Sugauli.

Since then, the industries department has floated three separate tenders and managed to secure bid money from interested investors for six other sugar mills - at Raiyam and Sakri for the bid money of Rs 27.36 crore with project proposal of around Rs 200 crore, at Motipur and Bihta for the bid money of Rs 79.40 crore and investment proposal of Rs 350 crore, and at Samastipur and Lohat for the bid money of Rs 58.71 crore.

Since the revival of every closed sugar mill is not considered a viable proposition, owing to the general disinterest of investors, the government has given them latitude to start any viable industry other than sugar, if they thought so.

Accordingly, the investors concerned have proposed production of sugar at Raiyam, Motipur and Lohat. Others among them have proposed to develop food park, dairy industry and distillery at Sakri, logistics park at Bihta, and a jute mill at Samastipur. The government did not find it anachronistic and, in fact, CM Nitish personally explained the situation in the state assembly during its budget session.

"Things are turning for the better," said cane industry director Lakshmeshwar Jha, adding that the industries department principal secretary, A K Sinha, has already moved a proposal to the government for its clearance to float tenders for the fifth time for the rest of the seven sugar mills.

Sugary facts: 2011-12

Cane crushed by 9 private sugar mills and two of BSSDC sold to HPCL: 48.83 lakh tonne

Sugar production: 4.5 lakh tonne

Area under cane cultivation: 2.54 lakh hectare

Cane production: 215.1 lakh tonne

Average cane productivity: 84.51 tonne per hectare