Crises facing the sugar mills in Karnataka never seem to end. While, last year the mills had to grapple with the excess production of sugar and low price realisation, this year their problems have been compounded by a shortage of cane and lower prices for the power generated by co-generation units. As many as 19 of the 52 sugar mills in Karnataka have a combined capacity to produce 412 Mw power.
However, due to the indifference of the Karnataka Power Transmission Corporation Ltd (KPTCL), which has been purchasing power from various private generators, towards the sugar mills, the co-generation units have been suffering from a lower price realisation. While, KPTCL is buying power from the neighbouring states and independent power producers at Rs 8.88 per unit to meet the shortage, the price paid to sugar mills is in the range of Rs 2.80 - 3.86 per unit. The state is facing a shortage of around 10 million units per day.
While 13 sugar mills supply power to KPTCL, six others supply to private companies like Tata Power and Reliance Energy at Rs 8-10 per unit. According to KPTCL, the mills are paid as per the agreement reached with them many years ago.
Jagadeesh S Gudagunti, President, South Indian Sugar Mills Association (SISMA) said, “We are ready to supply power to the state grid. But we are paid a negligible amount. Even if the KPTCL pays our mills Rs 7 per unit we will be happy to supply to them. Other mills can also install power generating units if KPTCL gives us a level playing field thereby helping the state meet the shortage. It’s a pity we are not given a level playing field with other power producers.”
He said other mills are unable to go for generation of power because they do not get equal treatment with other power producers and more than that the financial institutions are not ready to extend finance to install power generating units. “We are unable to get bank finance because banks insist on a power purchase agreement with KPTCL. Our mills are not interested to sell their power to KPTCL because of the poor realisation. So our mills are not coming forward to generate additional power,” he said.
The combined installed power generating capacity of all 19 mills in Karnataka is estimated at 412 Mw, whereas they are exporting 266 Mw to the state grid. “If we can get a guarantee from KPTCL that they will give us a level playing field with other power producers the entire sugar industry can go in for installing power production systems. There is a potential to generate at least 1,000 Mw from all 52 mills put together,” Gudagunti said.
The problems of sugar mills do not end here. They are also facing delay in payment of power dues from KPTCL. While the private buyers make the payment every week, the KPTCL pays it once in six months. “Becuase of the delayed payment by KPTCL the mills are unable to make prompt payments to the farmers for purchasing cane from them,” he said.
