MSEDCL asks sugar mills to make cane payment after adjusting power dues owe by farmers: Media Report

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Pune: Maharashtra State Electricity Distribution Company Limited (MSEDCL) has asked the sugar mills in the state to adjust the power bills in the cane bill payabale to farmers, reports Indian Express.

The media report further states that the MSEDCL warned the mills that it would purchase the electricty at a lower price if they fail to recover pending dues from the farmers.

Sugar mills in the state produce their electricity from the bagasse, a by-product left after crushing cane. The mills sell excess power to the MSEDCL which it distributes elsewhere.

Sugar mills have signed a long-term power purchase agreement (PPAs) of 12 years with the MSEDCL to sell electricity. The rate of power was pre-decided. Since 2013, mills are bidding to sell their electricity as rates are higher. Millers claim that at present, the rates are below Rs 5/unit, and it is just their cost of production.

Indian Express reported that for mills whose PPAs had lapsed, the agreements were renewed this year at a base rate of Rs 4.75/unit. While the rate is lower than expected, it was the inclusion of a ‘recovery clause’ by MSEDCL in agreement that has worried mills more.

Sugar mills have slammed this clause. Jaiprakash Dandegaonkar, vice-president of the Cogeneration Association of India said, “It is illogical as other than harvesting and transportation charges, they are not allowed to deduct any amount from FRP that is being paid to cane growers.”

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