Foreign consortium eyes Tk5,500cr investment in 3 new sugar mills
The consortium has proposed to jointly establish three new state-of-the-art sugar mills
- To establish sugar mills in partnership with govt
- Expected investment amount Tk5,500 crore
- Bangladesh Sugar and Food Industries Corporation to assume half the stake on the govt's behalf
- A standing committee of industries ministry has decided to conduct study
A joint consortium of companies from Thailand, Japan and the United Arab Emirates has offered to inject Tk5,500 crore worth of investment for three new sugar mills in partnership with the government.
Although the state-funded sugar mills have received foreign aid before, the recent partnership offer from the Sugar International Co is first of its kind for the industry, according to sources at the Bangladesh Sugar and Food Industries Corporation (BSFIC).
"The consortium has proposed jointly establishing three new state-of-the-art sugar mills," Md Arifur Rahman Apu, the BSFIC chairman, told The Business Standard.
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"The investment will be very positive for the sugar industry," he added.
The offer, made by the consortium, is pending the final nod from the Prime Minister Sheikh Hasina.
Sources said the Ministry of Industries has forwarded a summary on the foreign investment proposal to the premier.
Authorities are yet to decide whether to cultivate sugarcane on land owned by state mills for the proposed factories.
"Once a deal is reached, if the consortium requires, the sugar and food industries corporation will provide the state-owned land," said the BSFIC chairman.
Md Emdad Hossain, a local representative of the investors, told The Business Standard, "In partnership with the BSFIC three new sugar mills will be established. Once the government okays the proposal, which we have already presented, we will move forward with the project."
Of the 15 state-owned sugar mills, Carew & Co is the only profitable company, which sells liquor, a by-product of the sugar-making process. Rest of the mills have been struggling for years and counting losses.
The mills are unable to produce sufficient sugar, primarily due to the shortage in supply of sugarcane, the main raw material. As a result, the mills are operational only for one month of the year.
Reeling under massive loans, these mills are having a hard time overcoming losses.
The country's sugar production is done through sourcing sugarcane from the local market and importing raw sugar. Few of the giant industrial groups of the country produce sugar by importing raw sugar from abroad.
Only the state-owned mills produce sugar through crushing sugarcanes. As the process is more expensive, private entrepreneurs prefer importing raw sugar.
The yearly demand of sugar stands at nearly 18lakh tonnes, of which over 90% comes from refining sugar, while the state-owned sugar mills are only able to meet 5% of the total demand.
With the investment offer, the foreign consortium has sought lands to establish sugar mills in three areas in the country.
The matter was presented during a meeting of the parliamentary committee on the industries' ministry on 13 January.
The meeting decided on conducting surveys for establishing environment-friendly cane sugar industries in Dinajpur, Jhenaidah and Rajshahi areas.
The decision to pick the areas were based on the areas' weather and soil, which is conducive for sugarcane production, said officials.
Three of the state-owned mills, which are currently sustaining losses, are located in the three districts.
"According to the consortium's proposal, they will bring in the finest sugarcane seeds to cultivate on our lands. They will also introduce the latest technology for greater production volume," BSFIC Chairman Apu said.
Asked whether the new partnership will deal any negative impact on the state-owned mills, he said, "There will be conflict, rather it will be favourable for the industry as a whole."
