In the first phase, Bangladesh Sugar and Food Industries Corporation (BSFIC) plans to refine 30,000 tonne sugar in Pabna Sugar Mills in the next season.

The corporation will then expand the refinery operations to other mills, which can be connected to the national gas grid as gas is considered as economically most viable fuel.

Officials hope the new idea of keeping the state-run mills operational all year round would help them come out of loss that prompts donors to suggest privatisation of the mills.

Two privatised sugar mills -- Deshbandhu in Narsingdi and Kaliachapra in Kishoreganj have also planned to refine sugar during non-crushing season.

The state-run sugar mills never see profit for which the corporation managers and experts blame on keeping the factories idle for over six to eight months a year.

The corporation has to pay salary to its 15,700 employees in 14 mills though there is no production or any other activities during non-crushing season after March.

A high official of BSFIC said, "We have chosen the Pabna mill as it can easily be connected to gas line. Gas can also be made available in Zeal Bangla Sugar Mills in Jamalpur and we'll move to that if the Pabna venture comes out successful."

The mills use cane rubbish as fuel to run boiler during crushing season but for refining sugar they will need gas or furnace oil during off-season. Corporation officials said gas is economically more viable than high priced furnace oil.

The BFSIC official said if gas pipeline spread throughout the northern and southern regions of the country, all mills can start refinery operations.

The 14 mills under BSFIC are located in Panchagarh, Thakurgaon, Shetabganj (Dinajpur), Shyampur (Rangpur), Joypurhat, Rajshahi, Natore, Pabna, Kushtia, Chuadanga (Carew & Carew Company), Jhenidah, Faridpur and Jamalpur.

The mills produce around 1.5 lakh to 2 lakh tonne a year against an annual demand of more than 8 lakh tonne. The rest of the demand is met by imported or smuggled sugar.

The state-own mills are making loss every year with the cumulated loss figure of BSFIC mills standing at Tk 40 crore in 2003-2004. The extent of loss is however declining after privatisation of two mills in Narsingdi and Kishoreganj.

Finding the root cause of loss under state management, the buyers of the two privatised mills have also planned not to remain idle during non-crushing season. Deshbandhu plans to refine 1 lakh tonne and Kaliachapra 60,000 tonne sugar.

The Board of Investment (BoI) recently allowed 16 private companies to refine raw sugar, which the industries ministry opposed saying it would create an output glut and play with the fate of state-run and privatised mills.

A BSFIC official said if all 16 refineries produce in full capacity, the total sugar production will be more than three times the domestic demand.

Maximum three sugar refineries, each having an annual production capacity of one lakh tonne, should be allowed, he said.

He called for creating a new HS code for raw sugar to make sugar refining profitable. Presently, refined and raw sugar is taxed in same HS code.

The corporation has set 1,77,600 tonne production target for the coming season, starting from late October and ending in March, by crushing 22.77 lakh tonne sugarcane.

The target was 1.8 lakh tonne in the last crushing season but the mills could produce only 1.18 lakh tonne.

In a bid to encourage farmers to expand sugarcane cultivation, the government recently raised cane procurement rate from Tk 41.5 to Tk 44 for mill gate price and from Tk 41 to Tk 43 for field price.

The government will carry out BMRE (balancing, modernisation, renovation and expansion) of the state-owned sugar mills to revitalise the local sugar industry.