State govts slash price of electricity generated by sugar mills by 50%

Despite several measures taken by the government to overcome problems in the sugar sector, the profitability of mills, on account of electricity they produce, is likely to remain under pressure during the current crushing season due to a sharp cut in the prices of electricity by state grids.

Electricity is generated by sugar mills from molasses in cogeneration units. While a part of the electricity generated by individual sugar mills is used for captive consumption, surplus, if any, is supplied to state grids at a fixed price which used to be between Rs 5-6 per unit until the last year, especially in Maharashtra and Karnataka, depending upon the demand and supply situation in the specific area. The average price of electricity, which worked out to Rs 6.50 per unit last year, has now been slashed to Rs 3 – 3.50 per unit.