19 May 2021, New Delhi: Sugar mills in Maharashtra are gearing up to set up oxygen manufacturing plants to cater to the demand of medical oxygen from hospitals treating Covid-19 patients. But major players in the sector have set the alarm bells ringing.
Maharashtra Chief Minister Uddhav Thackeray has welcomed sugar mills’ decision to start oxygen manufacturing. He said that this effort will help the State to combat the third wave of Covid-19 pandemic.
Recently, 15 mills, including private and cooperative mills, placed orders for skid-mounted oxygen manufacturing units and others are in the process of molecular sieve modification in ethanol plant for filtering oxygen.
One of the senior industry officials told BusinessLine that if sugar mills focus on oxygen manufacturing and stop ethanol production, mills will suffer financial losses. He said that with huge stocks of sugar piling in ware houses, mills are already reeling under debts. “Mills will have to consider how they are going to deal with finances and also how they will fulfil the commitment to produce ethanol,” said the official.
Union Minister Nitin Gadkari, who runs sugar mills in the Vidarbha region, has become vocal on the issue. While speaking at the inauguration of the oxygen plant established by a sugar mill in Osmanabad district of Maharashtra last week, Gadkari said that the sugar industry is struggling to survive and should be cautious while starting oxygen projects.
Gadkari said that sugar mills can produce oxygen as a byproduct but closing distilleries for producing oxygen could prove disastrous. “Sugar mills will face major problems if they decide to close distilleries. Already mills are facing major financial problems and many (mills) have no money to pay debts. We should not land in a situation where in an effort to save one’s life we are killing the other,” warned Gadkari.
In a tight spot
According to Indian Sugar Mills Association (ISMA), sugar mills are in a tight spot with excess sugar production and ex-mill sugar prices ruling in the range of ₹31-33 per kg for the last few months. To maintain liquidity of funds, mills are under pressure to sell sugar at low prices. They are not able to generate adequate funds to pay the full Fair and Remunarative Price to cane growers, ISMA said. Industry players say that mills should prepare a plan to sell oxygen to other States if demand in Maharashtra declines.
Meanwhile, the National Federation of Cooperative Sugar Factories (NFCSF) is working with Pune-based Vasantdada Sugar Institute to find out the business model for sugar mills manufacturing oxygen.