The Financial Express

BSFIC sugar mills come under performance deals

Target to revamp the ailing sector

Mir Mostafizur Rahaman | Published: August 10, 2019 10:03:48 | Updated: August 16, 2019 13:05:19

BSFIC sugar mills come under performance deals

The government has started the process to introduce the Annual Performance Agreement (APA) model for the state-owned sugar industries in a bid to revamp this ailing sector.

The APA system was introduced in many parts of the world but this is for the first time that a Bangladeshi state-owned corporation, namely Bangladesh Sugar and Food Industries Corporation (BSFIC), is going to embrace it.

The vital sector, providing job opportunities for more than 100 million people of the country, has long been struggling due to a string of reasons, of which poor management is one. The corporation has an aggregate amount of outstanding loans worth Tk 56.96 billion (5,696 crore) and its Debt Service Liability was worth Tk 4.30 billion (430 crore) as of June last year.

"The APA system is expected to add a fresh impetus to the management system of the sugar industries as under this system every key component of the management structure of the sugar corporation will be accountable and target-driven," Industries Secretary Abdul Halim told the FE.

Once as per the prescription of the World Bank, disinvestment was initiated for loss-making enterprises, but in Bangladesh that experience was not good as most of the buyers failed to run the enterprises , he explained.

Under the system, the chairman of the corporation has signed performance agreements with the Managing Directors (MD) of 15 sugar mills and each MD will sign APAs with four General Managers of their respective mills.

These managers are responsible for finance, factory, agriculture and marketing.

"Previously when a mill failed to meet the target , the MD used to point to the poor sugarcane production in the area but now he has to ensure that sufficient sugarcane will be available to his mill" the industries secretary explained.

"It has also been found that after spending a lot of money for maintenance of a factory, it broke down just after the resumption of the sugarcane crushing. But now we have asked the factory managers to ensure that the factory will not break down during the entire crushing season and his APA will contain this clause," Mr Halim said hoping that the system would add an impetus to the industry.

The main objective is to ensure availability of sugarcane for mills, increase the sugar recovery rate and enhance sugar production which ultimately would cut down the overhead cost of the mills, officials said.

The BSFIC oversees activities of its 15 sugar mills, one distillery unit, one engineering factory, one organic fertiliser and three commercial establishments. The annual production capacity of 15 sugar mills under the organisation is 210 thousand (2.10 lakh) tonnes.

In its recent history the state-owned sugar mills failed to meet their annual production targets. In the last three seasons the BSFIC mills were able to meet 60 per cent of the production target on an average.

In the coming crushing season which will start from October, the BSFIC is setting a production target of around 160 thousand tonnes.

At present, the annual demand for sugar is about 1.4 million (14.00 lakh) tonnes in the country. The deficit of sugar supply in the country is met by six private refinery institutions as well as imported sugar. In FY2017-18, the BSFIC produced 68.56 thousand tonnes of sugar against its target of 128 thousand tonnes.


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