Modernisation of sugar mills: Little progress in 8 months

Although eight months have passed since the closure of six sugar mills, there has been little progress in modernising them owing to red tape.

Following a government order, the Bangladesh Sugar and Food Industries Corporation (BSFIC) shut the production at six mills -- Pabna Sugar and Shyampur Sugar in Rangpur, Panchagarh Sugar and Setabganj Sugar in Dinajpur, Rangpur Sugar, and Kushtia Sugar -- in December last year for an indefinite period.

Until modernisation takes place, the affected farmers, however, can supply sugarcane to the operational mills.

Officials of the industries ministry and the BSFIC say it takes time to complete official procedures, which involve securing approval from the ministry, vetting by the law ministry and approval from the Prime Minister's Office.

Industries ministry officials have no clear idea how long it would take to finalise the process to pave the way for investment to flow to modernise the mills.

"We have prepared a summary on how to ensure profitability of the sugar mills. It will be submitted to the PMO for the final approval," said Sibnath Roy, additional secretary to the state-run corporation under the industries ministry and the head of the negotiation team for investment.

The mills' closure came after the BSFIC found that the sugar mills faced Tk 787.10 crore in losses on an average per year from 2015-16 to 2019-20 against sugar crushing. Over the last five years, the BSFIC incurred losses of Tk 3,976 crore.

The government intends to go for joint venture investment.

Twenty-five steps have been identified to ensure profitability and revive the sick industries by forming joint ventures to attract foreign direct investment.

If the government gives the final nod for FDI, the process will go ahead, said an official of the industries ministry.

Sources said several meetings were held with stakeholders, investors and managing directors of 15 sugar mills to find out how to come out from losses.

The BSFIC has received seven investment proposals from companies to upgrade the sugar mills.

One of the proposals jointly sent by companies from Japan, Thailand and the United Arab Emirates have expressed their intention to form a joint venture with the government to upgrade the shuttered mills, ensure profitability and export by-products.

Sutech Engineering Co of Thailand, Sharkara International of the UAE and Sojitz Machinery Corporation of Japan will invest about Tk 7,000 crore under the joint venture within two years.

The representatives of the companies met with the industries ministry and placed final business plans, said a local agent.

"Negotiation is underway with the investors," said Md Arifur Rahman Apu, chairman of the BSFIC.

"The government will take the final decision on the modernisation of the sugar mills."

According to the business plan, the three companies will supply a high-yield variety of cane free of cost and produce food products from by-products and high-end spirits for exports.

The high-yield variety can produce 80 tonnes of sugarcane per hectare per year compared to 20 tonnes from the local variety of the crop.

The proposal said the investors would mobilise 60 per cent of the investment, and the rest would come from the government.