The Uttar Pradesh government’s new energy policy allowing bagasse-based co-generation units of sugar mills to generate power from coal has no takers. Reason: prohibitive cost involved in shifting to coal as the fuel for power generation.

The policy allowing coal as fuel for firing the boiler was formulated for ensuring round-the-year power generation from the co-generation units. Currently, these units operate only during the sugarcane crushing season and use crushed sugarcane or bagasse as fuel.

Even the government’s decisions of allowing the co-generation units to sell 50 per cent of the power generated outside the state and further 10 per cent power to a third party within 50 km radius of the sugar mill did not ring a bell.

“Unless the government comes out with an attractive package, nobody is going to shift to coal-based generation of power as the cost is prohibitive,” said R K Chakravarti, secretary, UP Sugar Mills Cogen Association. “The cost per unit in case of coal is Rs 6.50 per unit while in case of bagasses the cost per unit is Rs 5.20,” Chakravarti added.

Another reason is that new equipment would be needed for shifting to coal fuel and which will add to the investment cost.

“The sugar mill will consider the option of coal only after the tariff is hiked by the state government,” said Chakravarti. According to him, the tariff was revised by the power regulator — UP electricity Regulatory Commission — in September following their persistent demands.

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