Responding to a petition filed in the Delhi High Court, the government has said that it would need six months to decide the final price of levy sugar after an association of sugar mills challenged a Food Ministry order fixing procurement price at Rs 1,227-1,385 per quintal.
The government's submission came on a petition filed by the UP Sugar Mills Association, which had approached the Delhi High Court to set aside the order on the levy price of sugar, issued on January 21, 2009.
During the proceedings before the Division Bench of Justice B D Ahmed and Justice Veena Birbal, advocates appearing for the government told the Court that they have received the reports of the Tariff Commission and would take around six months to go through them and take a decision.
The Food Ministry had sought the views of the Tariff Commission to set the levy price of sugar.
Advocate Vikas Mehta, appearing for the UP Sugar Mills Association, submitted that sugar producers are incurring huge losses as they are paying sugarcane growers state advised prices (SAP) fixed by state governments concerned.
"The (levy) sugar price is unchanged since 2003-04 to the current year in spite of the fact SAP has increased by 47 per cent from 2003-04 to 2008-09. We are paying higher prices to the farmer without getting our cost. This is illegal," he said.
The government in its written reply before the court said that the Rs 1,227-1,385 per quintal for levy sugar is just a provisional price.
"It has been clearly stated that the prices of levy sugar for the sugar season 2008-2009 are provisional prices and recoveries on account of excess payment made, if any, or additional payments, if due, will be on finalisation of prices," clarified the government in its reply through the Department of Food and Public Distribution.
In its petition, the mills' association had also requested the Court to direct the government to refix the levy sugar price for the sugar season 2008-09 in respect of the West UP, Central UP and East UP zones, in compliance with the order of the Supreme Court in 2008.
In their petition, the mills' association said that the industry has incurred huge losses due to high cane prices and low sugar realisation.
"In the last two years 2006-07 and 2007-08, as per the data available with the association, 51 factories in the private sector have incurred huge losses amounting to Rs 717 crores and Rs 688 crores, respectively," shared the Association.
The government also said that the Tariff Commission's study was delayed as sugar mills did not submit the required data when the study was on. In 2007, the Commission sent letters to 500 sugar mills for price fixation but received replies only from three of them, elaborated the government in reply.
The Association is represented by leading sugar producers like Triveni, DCM Shriram, Dhrampur Sugar Mills, JK Sugars, Dalmia Sugars, Balrampur Chini Mills, Modi Sugar etc.
The matter has been listed for hearing on July 15.
