Higher power tariff will hit production

HYDERABAD: The 20-25 per cent power tariff hike for the industry is unwarranted and could increase the cost of production and slow down the economic growth, trade bodies have warned. The

Published: 03rd April 2012 03:18 AM  |   Last Updated: 16th May 2012 07:18 PM   |  A+A-

HYDERABAD: The 20-25 per cent power tariff hike for the industry is unwarranted and could increase the cost of production and slow down the economic growth, trade bodies have warned.

The industry has been facing 40 to 60 per cent power cuts due to 10-15 per cent shortage of power production in the state and the steep increase will result in cost escalation of final goods and services by about one to 5 per cent, thereby affecting the common man.

 “The disproportionately high power tariff being levied on the industry is not a step in the right direction and will only escalate the price-line and inflation and slowed own the economy,” said VS Raju, president of the Federation of AP Chamber of Commerce and Industry (Fapcci). “Industry consumes 35 per cent of the power produced but pays 60 per cent of the cost,” he pointed out.

The revised tariff is effective from April 1. The increase for industry ranges from Rs 0.87 per unit for LT supply, Rs 1.28 for 11 KV supply, Rs 1.12 for 33 KV supply and Re 1 for 132 KV supply.  In percentage terms the increase is 21 per cent, 36.4 per cent, 34.46 per cent and 33.67 per cent respectively.

“This tariff increase is coming up against the background of increase of 2 per cent in service tax and excise duty, property tax, VAT increases, which will increase the prices of the goods and services,” Raju said.

Suchitra Ella, chairperson of the AP chapter of Confederation of Indian Industry, said the high power tariff would send wrong signals to prospective investors as the power hike comes at a time when industry is in a recovery-mode. “The government could have reduced the power subsidies and resorted to better expenditure management methods instead of hiking the rates,” she said, adding, “Industry is unable to meet the minimum production demands due to frequent power cuts and power holidays, and the hike in the tariff will further burden industry.”

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