Maharashtra Government Approves New Policy for Cooperative Sugar Mills
The state government of Maharashtra has given its official approval to a comprehensive new policy designed specifically for cooperative sugar factories. This policy enables these factories to establish by-product processing projects using the BOT (Built Operate Transfer) and BOOT (Built Own Operate Transfer) models. The primary objective is to significantly strengthen the financial position of these mills, which have been facing considerable economic challenges.
Addressing Financial Distress in the Sugar Sector
According to a government resolution issued on Thursday by the cooperation, marketing, and textiles department, numerous cooperative sugar mills across Maharashtra are experiencing severe financial stress. This precarious situation has made it increasingly difficult for these factories to fulfill their obligation of paying assured cane prices to farmers. Furthermore, the financial strain has hindered their ability to secure fresh loans necessary for expansion and modernization efforts.
To effectively tackle these pressing issues, the government has now permitted mills to actively invite private investment. This strategic move allows for the establishment of projects based on sugar by-products without imposing any additional financial burden on the factories themselves. The policy is applicable to both financially distressed units and those that are currently financially sound, ensuring broad-based implementation across the sector.
Operational Framework of the BOT/BOOT Models
Under the newly approved BOT and BOOT framework, a private developer will be responsible for constructing the project using its own capital. The developer will then operate the facility for a predetermined fixed period, which generally ranges from 5 to 10 years. Following this operational phase, the project will be transferred to the sugar factory. The maximum contract period for such agreements has been set at 15 years to provide clarity and stability for all parties involved.
For projects with a total investment of up to Rs 5 crore, approval will be granted at the sugar commissioner level. However, projects exceeding this Rs 5 crore threshold will require state-level approval, ensuring appropriate oversight for larger-scale initiatives.
Eligibility Criteria for Distressed Units
Financially distressed cooperative sugar factories will qualify for this policy if they meet at least one of several specified criteria. These criteria include having accumulated losses for three consecutive years, exhibiting negative net worth, facing audit classification issues, or operating with a capacity utilisation rate below 50%. This targeted approach aims to provide relief to the mills most in need of financial revitalization.
It is mandatory for all factories to obtain prior approval under Section 20(A) of the Maharashtra Cooperative Societies Act, 1960, before entering into any formal agreements with private investors. This legal requirement ensures compliance with existing regulations and safeguards the interests of the cooperative entities.
Transparent Selection Process for Developers
The selection of private developers for these projects will be conducted through a competitive and transparent process. This will involve the issuance of Expression of Interest (EOI) documents followed by e-tendering procedures. Such measures are designed to promote fairness, encourage competitive bidding, and ultimately secure the best possible partners for the sugar mills.
Expected Benefits and Project Scope
The government resolution highlights that the approved by-product processing projects are expected to deliver multiple significant benefits. These projects, which can include co-generation plants, ethanol production units, bio-CNG facilities, hydrogen generation setups, and solar power installations, are anticipated to generate substantial additional revenue streams for the sugar factories.
Beyond financial gains, these initiatives are projected to create valuable rural employment opportunities, contributing to economic development in agricultural regions. Additionally, the policy is expected to drive technological modernisation within the sugar sector, enhancing efficiency and sustainability for the long term. This comprehensive approach represents a strategic effort to revitalize Maharashtra's cooperative sugar industry through innovative partnership models and diversified revenue generation.
