Soft loans of Rs 12,900 cr for sugar mills okayed

New Delhi: In a move to create ethanol capacity under a recently launched scheme, the Union government announced an additional soft loan of Rs 12,900 crore--a loan given at a subsidised interest rate---for sugar mills on Thursday. Besides, the government also approved the provision of additional funds for sugar mills to allocate an additional fund of Rs 2,790 crore to augment ethanol production.

The government also cleared investment proposals worth over Rs 31,560 crore in power projects, including two coal-based thermal plants and a hydro project on river Chenab in Jammu and Kashmir. The thermal power plants in Buxar, Bihar, and Buland-shahr, Uttar Pradesh are expected to become operational by 2023-24.

The Cabinet also allowed the alternative mechanism to decide on the timing, price and quantum of strategic sales of public sector companies.

The sugar industry expressed unhappiness over the fund allocation, as they were expecting to receive soft loans of Rs 15,000 crore with a subsidy of Rs 3,355 crore on loans to sugar mills. A decision in this regard was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi.

As of now, the food ministry has approved 114 applications for a loan amount of Rs 6,000 crore although applications received were for over Rs 13,400 crore worth of soft loans. “To augment ethanol capacity, the government has approved additional funds. These additional funds will be in two categories — Rs 2,790 crore and Rs 565 crore,” Finance Minister Arun Jaitley told reporters after the cabinet meeting.
n June 2018, the government had announced a soft loan of Rs 4,400 crore and provided an interest subvention of Rs 1,332 crore to mills over a period of five years, including a moratorium period of one year to augment ethanol output.

Reacting the government’s move, the shares of Balrampur Chini Mills fell 2 per cent on the BSE, while Dhampur Sugar Mills and Avadh Sugar declined nearly 3 per cent and Dalmia Bharat Sugar was down 4 per cent.

Sugar industries are in stress as sugarcane dues have crossed Rs 20,000 crore till February of this marketing year (October-September). When asked whether this additional soft loan will help bring down the mounting cane arrears, Jaitley, however, clarified that it would not have any immediate impact but will be in the long term.

Of the power projects cleared on Thursday, the Buxar project will be implemented by SJVN Thermal Private Ltd., a wholly owned subsidiary of SJVN, a mini-ratna CPSU. “The project is expected to generate substantial direct and indirect employment apart from various other socio-economic development in the project area. The Buxar TPP will start yielding benefits from 2023-24,” said an official statement.

As part of a series of decisions, the Cabinet allowed the alternative mechanism to decide on the timing, price and quantum of shares of a state-run company to be put on the block for outright sale, which is seen as a move to fast-track strategic sale.