The state government had last month invited EoIs for these mills located at prime locations with a lot of land.
Although international consultancy firm Ernst & Young is advising the state government on the issue, the disinterest of the private players has put the sugar department in a spot.
By the earlier bidding date of June 13, only two private players, Bajaj Hindusthan and Dalmia Group, had submitted their bids. While, Bajaj owns 16 sugar mills in the state, Dalmia has three mills at Ramgarh, Jawaharpur (Sitapur district) and Nigohi (Shahjahanpur).
The state government, in an attempt to push the privatisation process further, has organised an investors meet on June 20 in Delhi. The investors meet will be attended by the UP secretary (disinvestment), principal secretary (cane and sugar development), Corporation MD and other senior officials.
Sugar Corporation Managing Director Vinay Priya Dubey told Business Standard that the government would seek the industry's feedback on the privatisation issue and decide whether the bidding conditions were too stringent, which might have kept the prospective bidders away.
A senior official, on condition of anonymity, admitted that the private sector is not showing much interest in these sugar mills. "Had the private sector been interested, we would have received a good number of bids by the deadline itself," the official added.
Most of these mills have old and obsolete machinery. Of the total 33 sugar corporation mills, 22 are in working condition, while only 17 of them had participated in the 2007-08 crushing season. Besides, four of these sick units are under the purview of Board for Industrial and Financial Reconstruction (BIFR).
The decision to privatise these mills was taken in June 2007. Most of these sugar mills also carry substantial liabilities of payments and farmers' dues and this would be one of the factors, which will ultimately decide the interest of the private parties.
The privatisation of these ailing sugar mills would mark a new era in the sugarcane sector in UP and lead to more efficiency. Almost 40 lakh farmers cultivate sugarcane in the state.
The area under sugarcane cultivation is likely to shrink by 30 per cent this year due to the delay in cane payment and confusion over cane price during the last crushing season.
