Decision to sell off sugar mills at old rates to raise storm

LUCKNOW: The state government���sdecision to sell a dozen sugar mills of the UP Sugar Corporation at old circlerates fixed by district magistrates is all set to raise a storm. The sale, ifcarried out, is likely to cause heavy losses to the exchequer as the DM circlerates have been revised substantially.A senior official told TOIthat before moving ahead with the plan of disinvestment, it is mandatory to seekapproval of the Union government. This approval has not been sought in thepresent case, claimed the official.Sources in the government saidthat a private agency was hired by the state in August 2007 to assess the valueof the mills, including its plant and machinery and land. While the land wasvalued at Rs 1,573 crore and the plant and machinery Rs 500 crore, the value ofsugar, molasses and old equipment was fixed at Rs 500 crore.Theofficial said that as per the revised DM circle rates, the cost of land isincreased by 15 to 20 per cent. ���As most of the corporation���s millsare situated in posh localities, the actual market price is much higher than theDM���s circle rates,��� the official pointed out. He added that most ofthe corporation���s sugar mills, including those in Bareilly, Rampur,Bijnor, Meerut, Hardoi, Mathura, Barabanki and Deoria, were situated in theheart of the city.Going by the revised circle rates and hike insteel price, the floor price should be somewhere near Rs 3,500 crore, but ifsources are to be believed, the same has been fixed at Rs 1,000 less than thepresent value. It is pertinent to mention that the state government had alsochanged the land use and the end use of sites on which these sugar mills aresituated. ���This was done to attract private entrepreneurs to make a fairbid,��� the official said adding that the new dimension added to make thedeal lucrative failed to attract many bidders as only five contenders qualifiedthe technical bid. When these five were asked to make financialbids, only one of them came forward, forcing the state government to extend thedeadline four times. ���On June 30, a meeting of investors was convened at afive-star hotel in the national capital, but this effort also failed to bearfruit,��� another official in the sugar department said.