Thursday, October 04, 2007

Bihar to revive eight sugar mills

Making a final call on the fate of the closed state-owned sugar mills, the Bihar government has formally decided to revive at least eight of them by handing them over to private players on a long-term lease basis. The government is expected to soon invite private bids for reviving the closed mills.

The government had engaged SBI Caps as a consultant to conduct a diagnostic study for their revival. SBI Caps in its report submitted to the government had recommended that of the 15 state-owned closed sugar mills, eight were viable units.

The remaining seven units were non-viable and could be used for any other purpose the government may deem fit. On the basis of SBI Caps’ feasibility report, the government has decided to go for private bids which will allow private players to seek control of the eight closed sugar mills on a lease for 60 years. SBI Caps will also assist the government in the private bid exercise.

The government could have gone for outright sale but it has instead preferred for the lease option to avoid any controversy. “The outright sale option could have raised some unwanted questions. The government obviously felt the lease offer would be a more safer and credible route for the revival of the sick units,” indicated an official of the sugarcane development department.

The eight sick units open for private bidding include Banmakhi, Goraul, Hathua, Lauriya, Motipur, Warsliganj, Lohat and Sugauli. All these mills along with seven other closed mills were one time the hot property of the Bihar State Sugar Development Corporation. However, gradually, one by one, all of them closed in the course of time.

Despite depressed sentiments in the sugar sector, the government is convinced the private players will be interested in the bid, seeking control of the closed companies on a long-term lease basis.

“Private players willing to set up greenfield projects have to contend with land acquisition problems. From this point of view, the players evincing interest in the take over of the closed mills will not have to encounter any such hassle. The closed mills are already in place and have their own lands,” sugarcane development minister Nitish Mishra told ET.

Some of the potential investors in the sugar sector who had even submitted their proposals to the government were of late not keen on pushing through with their investment plans keeping in view the prevailing downtrend cycle in the sugar sector.

Another reason why they may be putting on hold their investment plans could be because they now fancy investments in the closed sugar mills as a far more credible and prudent option.

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