Maharashtra Government Greenlights New Policy for Cooperative Sugar Factories
The state government of Maharashtra has given its official approval to a comprehensive new policy designed to strengthen the financial position of cooperative sugar factories. This significant move, announced through a government resolution issued on Thursday, allows these factories to set up by-product processing projects under the Built Operate Transfer (BOT) and Built Own Operate Transfer (BOOT) models.
Addressing Financial Stress in the Sugar Sector
The resolution, issued by the cooperation, marketing, and textiles department, highlights that numerous cooperative sugar mills across Maharashtra are experiencing severe financial stress. This financial strain has made it increasingly difficult for these mills to pay assured cane prices to farmers or secure fresh loans for necessary expansion and modernization efforts.
To tackle this pressing issue, the government has now permitted mills to invite private investment specifically for establishing projects that utilize sugar by-products. This strategic approach is intended to generate additional revenue streams without imposing a new financial burden on the factories themselves.
How the BOT and BOOT Models Will Work
Under the newly approved BOT and BOOT framework, a private developer will be responsible for building the project using its own capital. The developer will then operate the project for a predetermined fixed period, which is generally set between 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 capped at 15 years.
Project approval thresholds have been clearly defined: projects with an investment value of up to Rs 5 crore will receive approval at the sugar commissioner level, while projects exceeding Rs 5 crore in value will require approval at the state government level.
Eligibility Criteria and Application Process
The policy applies broadly to all cooperative sugar factories, including both those that are financially distressed and those that are currently financially sound. For distressed units to qualify, they must meet at least one of several specified criteria. These criteria include having three consecutive years of accumulated losses, a negative net worth, issues with audit classification, or capacity utilization falling below 50%.
Before entering into any agreements with private investors, factories are mandated to obtain prior approval under Section 20(A) of the Maharashtra Cooperative Societies Act, 1960. The selection of private developers will be conducted through a competitive and transparent process, utilizing Expression of Interest (EoI) and e-tendering methods.
Expected Benefits and Project Types
The government resolution emphasizes that these 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, and solar power units, are anticipated to:
- Generate substantial additional revenue for the sugar factories
- Create new rural employment opportunities
- Promote technological modernisation and sustainability within the sugar sector
This policy initiative represents a strategic effort by the Maharashtra government to revitalize the cooperative sugar industry, ensure timely payments to farmers, and foster long-term economic growth in rural areas dependent on sugar production.
