Selling at prices less than production costState-run sugar mills suffer Tk 14.04b loss

FT ONLINE

State-owned sugar mills have suffered a loss of Tk 14.04 billion for selling sugar at prices less than its production costs, officials said.

"The cash-strapped sugar mills are still struggling to meet their regular expenses," an official said on Sunday.

Bangladesh Sugar and Food Industries Corporation (BSFIC) finds it hard to reimburse bank debts and make other payments for lack of required funds, he said.

The mills incurred an aggregate Tk 14.04 billion loss between fiscal year (FY) 2007-08 and FY 2012-13, according to the data available at the BSFIC.

On the other hand, trade gap of the BSFIC has stood at Tk 4.89 billion from FY 2010-12, the data showed.

The state provided Tk 1.75 billion in FY 2012-13, Tk 1.35 billion in FY 2014-15 and Tk 500 million in FY 2015-16 for pay and allowances of sugar mill staff.

The BSFIC has so far taken out a loan of Tk 6.80 billion from Rupali Bank to pay sugarcane producers in due time, according to a BSFIC document.

"Sugar production costs by state-run mills are higher than its sale prices. Thus, the mills are incurring heavy losses," an official said.

The mills also cannot produce sugar at an expected level despite having the capacity for lack of basic raw materials, he added.

The industries ministry has undertaken multiple projects to diversify sugar products by tapping the existing potential to make the mills profitable.

Some projects are currently being implemented, he said.

These mills produce sugar from sugarcane supplied by its contract growers.

According to a source, nearly 67 per cent out of the mills' total operational costs is used for sugar production.

Some 20-24 per cent is spent on the payment of bank interest and charges, he added.

The country needs 1.5 million tonnes of refined sugar every year, most of which is met through imports.

On an average, 0.11 million (1.1 lakh) tonnes of sugar are needed every month, according to the official data.

There are 15 sugar mills under the BSFIC with 0.21 million tonnes of production capacity per year.

Some 60,000 tonnes of sugar were produced in FY 2016-17, sources concerned said.

According to an official, the government stockpiles some sugar to rein in a hike in the prices of the sweet substance.