Amaravati: The Andhra Pradesh government on Friday cancelled all existing bar licences in the state with immediate effect even as it announced a new bar policy to be implemented over the next two years.

At present, 3,500 liquor shops are being run by the State Beverages Corporation against the previous figure of 4,200.

The government will initiate a tendering process through lottery method next month and the licence fee for new bars has been fixed at Rs 10 lakh. Three-stars and micro beverages would have to pay Rs 1.5 crore for the same.

Chief Minister and YSR Congress Party president Jagan Mohan Reddy had already announced to bring down the number of bars by 40%.

As per provisions of the new policy, the government will issue licences to 479 bars. Besides, alcohol will be available in 38 three-star hotels and four micro beverages. From January 1, 2010, bars in the state will remain from 11am to 10pm.