This research presents the IEE (Initial Environmental Examination) and EIA (Environmental Impact Assessment) for sugar mills as power generation business. The study evaluates the proposed project according to the environmental assessment requirements of the Pakistan Environmental Protection Agency. The study has been conducted using standard environmental assessment methodology with the consultation of national and international environmental guidelines such as World Bank environmental and International Finance Corporation (IFC). The installation of 100 MW cogeneration thermal power plant adjacent to existing sugar mill located in district Muzaffargarh has been considered as a case study.  It has been concluded that the residual impacts of the proposed operation will be of minor significance and careful implementation of the Environmental Management Plan (EMP) will ensure that environmental impacts are managed.