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Maha stares at PDS sugar crunch after poor response to open market move

The Maharashtra government’s move to procure sugar for its PDS from the open market has failed to get bids…

The Maharashtra government’s move to procure sugar for its PDS from the open market has failed to get bids from cooperative sugar factories and traders, who cited earnest money deposit (EMD) of Rs 1 crore to Rs 5 crore depending on the quantity as too high.

Tenders issued twice by the government failed to elicit any response from both sugar mills and traders for the same reason. Traders from Maharashtra have expressed the fear that there could be a shortage of sugar for PDS consumers next month since no purchase has been made by the government for the last eight months.

State cooperation minister Harshavardhan Patil called for a meeting of the Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) and other stakeholders on Tuesday in Mumbai.

The supply of subsidized sugar under public distribution system has been stopped since July after decontrol of levy sugar by the Centre.

As per the new system, the state government will have to purchase sugar from open market through a transparent bidding process for sale through ration shops and the differential amount between the market rate and price at which the sugar will be sold through PDS outlets will be reimbursed by the Centre. The reimbursement, however, will only be up to Rs 18.50 per kg till the end of FY15, irrespective of the price at which the states purchase sugar from the open market.

A total of 17 district collectors in Maharashtra had tenders to procure 0.1 million tonnes (mt) for PDS for six months. Although the Centre has allocated Rs 360 crore towards the PDS subsidy, the amount is yet to be utilized, Yogesh Pande, founder president, Maharashtra Sugar Merchant & Brokers Association, said. He said traders had not bid for the tenders since they were not in a position to lock up funds for such a long period for the tenders.

Sanjeev Babar, MD, MSCSFF said that the government should procure sugar for PDS from sugar cooperatives in view of large inventory that has been piling up in godowns.When contacted, Vijay Singhal, state sugar commissioner, said the commissionerate was ready to extend any kind of support to the department of food and civil supplies in respect of PDS sugar. ?I understand that tenders have been issued but I am not aware of why there has been no solution so far,? he said.

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First published on: 25-02-2014 at 03:09 IST
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