Power tariff: Ferro-alloy industry in a crucible

HYDERABAD: The ferro-alloy industry is crying hoarse over the proposals of the power distribution companies (Discoms) to the AP Electricity Regulatory Commission (APERC) for clubbing it with H

Published: 23rd January 2012 05:01 AM  |   Last Updated: 16th May 2012 06:20 PM   |  A+A-

HYDERABAD: The ferro-alloy industry is crying hoarse over the proposals of the power distribution companies (Discoms) to the AP Electricity Regulatory Commission (APERC) for clubbing it with HT industry and suggesting uniform power tariff for both the sectors.

At present, the ferro-alloy industry is being considered a special category for fixation of power tariff on account of the fact that it is capital-intensive. “Power charges constitute nearly 60 to 70 per cent of the cost of production of ferro alloys,” AP Ferro Alloys Producers' Association chairman RK Saraf said at a news conference here on Sunday.

Ferro-alloys are the raw material for steel production. For the manufacture of ferro alloys, the ram materials are manganese, chromite, coal and coke. There are 30 ferro-alloy industries in the state, of which 20 are located in Vizianagaram and Visakhapatnam districts for easy access to the Visakhapatnam port.

According to Saraf, the power tariff applicable for ferro alloy industries at present is `2.65 per unit. If the APERC approves the proposal of the Discoms to place it in the high-tension (HT) power consumer category,  the power tariff will go up to `4.65 per unit, a hike of nearly 80 per cent. “We cannot take this kind of hike. Let there be a reasonable increase of about 12 per cent but not a whopping 80 per cent,” Saraf said, adding that if the APERC approved the Discoms' proposals, all ferro-alloy industries would shut shop from April 1.

If this kind of tariff is imposed on ferro alloys, proposed investments of about `8,000 crore in the ferro-alloy sector in the state because of the reasonable power tariff in force till now, may not come about. This apart, the hike would send wrong signals to  industries which had made commitment at the recent Partnership Summit to set up units in Andhra Pradesh, Saraf said.

Members of the association, who included PSR Raju, G Eeswara Rao and MS Lakshman Rao, said that as the sector consumed power heavily and did business on a high scale, the Discoms should not punish them by increasing the tariff abnormally. If the ferro-alloy industry shuts shop, the state and the Centre would lose a revenue of Rs 1,000 crore which the industry was paying by way of taxes.

“The Discoms are planning to mobilise `250 to `300 crore by revising the tariff for ferro-alloy industries but if they close down, the Discoms will not get the money and, on top of it, the Centre and the state will lose tax revenue as well.”

The industrialists said that they would submit a memorandum to the state government soon and raise the issue at the public hearings the APERC was planning to hold between February 16 and 27.

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