Govt sugar mills incur Tk 91.75b loss in 18 yrs

The Bangladesh Sugar and Food Industries Corporation (BSFIC) last made Tk 360 million in profits in the 2005-36 fiscal, and since then it incurred Tk 91.75b in loss over the past 18 years, according to the data from Bangladesh Economic Review.

People involved in the BSFIC said the state-owned corporation is very unlikely to make a profit in the distant future with its current state of operations, while experts said there is no need for such a government entity to incur a loss. Some experts, however, argue closure is not a solution, Reasons for the loss must be identified and initiatives taken to resolve it.

Funds were wasted by installing ETP (effluent treatment plant) at the various government sugar mills that had been closed from time to time. Prothom Alo published a report titled “Money wasted by installing ETP at closed sugar mills” on 13 August 2023. Tk 200 million was spent in 2020 to set up ETP at three sugar mills where production remained suspended.

Established in 1976, BSFIC currently operates 15 sugar mills and Renwick Jajneswar & Co Limited, a manufacturer of machines and parts for sugar mills. All of them currently incur losses except for Carew & Co (Bangladesh) Ltd.

According to the data from Bangladesh Economic Review, the government suspended the operation of six sugar mills in 2020 to reduce costs. Yet, the amount of loss stood at Tk 91.75b since the 2005-26 fiscal.

BSFIC secretary Chowdhury Ruhul Amin Kaiser said a five-year roadmap was formulated for the 2022-23 and 2026-27 fiscals to make the sugar industry profitable, and if the roadmap becomes successful, breakeven is possible at sugar mills.

The real scenario, however, is different from the breakeven plan as the BSFIC faced a loss of about Tk 5.33 billion in the first fiscal (2022-23), which rose to Tk 5.71 billion in the following fiscal.

Officials said sales of sugar are the corporations’ main source of income, but sugar production dropped. Sugar production was at 82,000 tonnes in 2019-20, which fell to 30,000 tonnes in the 2023-24 fiscal. Besides, 13 out of 15 sugar mills were established before independence, and the economic lifeline of most of them has ended.

The BFSIC had loans amounting to Tk 93.38 billion in 2023 with an annual interest of Tk 5 billion. Officials said it is difficult to make profits with these huge loans and interest. The government even subsidised Tk 2.80 billion in the last fiscal.

Amid such circumstances, the loss-making factories of the BSFIC can be handed over to the private sector, Centre for Policy Dialogue (CPD) research director Khondaker Golam Moazzem said. He told Prothom Alo the export processing zones (EPZs) or the Bangladesh Small and Cottage Industries Corporation (BSCIC) can be handed over the places after settling the asset and debt liabilities of these loss-making factories, and sugar or other industries can be set up on these.

Sugar mills remain operational for four months annually. BFSIC officials said it will not be possible to make profits unless sugar mills remain operational throughout the year. They foresaw a drop in sugarcane production, a rise in the price of raw materials, and no innovation of high varieties of sugarcane as the challenge.

Whatever the challenges are, closure of sugar mills is no solution, according to Anu Muhammad, a former professor of economics at Jahangirnagar University.

He told Prothom Alo reason for loss must be found out and steps must be taken accordingly. The main way to prevent the repetition of loss will be to identify the people responsible, as well as release of white paper on crimes and corruption. Besides, the policy framework must be changed focusing on the public interest, he added.