Tamil Nadu - Tiruchi   

Who’s pulling Tiruchi industries’ chestnuts out of the fire?

— Photo: M.Moorthy

Cut to the quick: An employee at a fabrication unit at Ariyamangalam near Tiruchi waiting for power supply.

TIRUCHI: A good number of industrial units in Tiruchi are making up for power shortage to a large extent through diesel-run captive plants. But, this eats into their profit margins.

Industrialists say they are left with no other alternative. Though there is 40 per cent power cut, in effect, the two-hour stoppage of supply in the morning and the peak hour restriction for four hours in the evening have meant 55 per cent power cut in real terms, they say.

According to B.V. Ramanan, Chairman and Managing Director, Livia Polymers Bottles and former Chairman, Confederation of Indian Industry, Tiruchi Zone, the cost of power has doubled per unit cost of manufactured product due to use of diesel generators.

“Power is vital for plastic industry, but the higher input costs cannot be passed on to customers. The power crisis has hit the industry in terms of margins, and capacity augmentation has stopped,” he says.

The cascading effect the industrial slowdown would cause to the State’s economy will be debilitating. “Industrial slowdown naturally means a huge loss to the State in terms of [State-level] value-added tax and excise duty,” Mr Ramanan adds.

The situation is no different for the hundreds of fabrication industries functioning as sub-contractors to the Bharat Heavy Electricals Limited (BHEL). Makingw good the shortage with diesel generators is not viable, and the danger of closure looms large, says a sub-contractor.

In fact, the adverse situation prompted a group of large-scale industries to initiate the process of establishing a coal-fired group captive power plant as a long-term measure. But, there is uncertainty in the project taking shape since the prospective stakeholders find the policy framework in Tamil Nadu unfavourable to proceed further.

The Electricity Act 2003 provides for undertaking measures conducive to development of electricity industry and promoting competition, thereby protecting interests of consumers and ensuring adequate power supply. But, the cross subsidy charge that the Tamil Nadu levies in the case of a third-party sale is a hampering factor, contends K. Subburaj, Chairman, Cethar Vessels Limited.

The norm is that the stakeholders of group captive power plant should hold a minimum 26 per cent share in the power project and share among themselves a minimum of 51 per cent of the energy produced. The rate per power unit generated from a captive power plant with efficient heat recovery system works out to Rs.6.20 per unit, after making provision for the fixed cost, variables, and operational expenditure.

Industry conglomerates will be encouraged to start coal-fired group captive power plants if the State considers levying from such plants wheeling charges for transmission of power from one distribution circle to another on a par with wind power generators.

The policy makers should also come out with a clear-cut assurance that waiver of surcharge, which is in effect for the shortage period, will be extended at least for a duration of 10 years, he said.

A senior official of the Tamil Nadu Electricity Board explains that the concept of cross-subsidy charge is in practice in the State as only one general tariff order has been issued by the Electricity Regulatory Commission.

Already, the Commission has initiated the process of phasing out the charge.

As for the wheeling charges to be extended for group captive power plants, the official points out that the charges may work out to be less than what is given for wind energy, which is infirm power.

In the case of captive power plants, the charges will be worked out, depending upon their injection and drawal points.

A discussion on encouraging industries to install own coal-fired power plants is on the agenda of the first meeting of the Micro, Small and Medium Enterprises Board slated for the third week of December, said S. Sridharan, President, Tiruchi District Tiny and Small Scale Industries’ Association, a non-official member of the Board. According to him, the gestation for establishing a coal-fired power plant may not exceed two years.

Captive power plants across the State will be beneficial to the Tamil Nadu Electricity Board, since the power generators will be able to supply energy to the Board’s grid at a reasonable price. In emergency situations, the need for TNEB to buy power at exorbitant costs will be obviated, he added.

In the short term, the alternative measure that Mr. Ramanan suggests for a win-win situation for TNEB and industrial sector is this: “The TNEB could restrict power on a rotation basis geographically by announcing the schedules beforehand. In places where power is restricted, industrialists should be encouraged to get off the grid and use generators through provision of sufficient subsidies. In the remaining parts of the State, the power should be provided without shortage. The cost provided as subsidies must be covered through levy of cess on power for industrial use across the board, for the shortage period.”

The TNEB may find this approach better than purchasing power for Rs.14 and selling it just for one-third the expenditure, Mr.Ramanan says.

For the industries, not only the worry over the loss of production will be mitigated but also the expenditure could be brought down.

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

Who’s pulling Tiruchi industries’ chestnuts out of the fire?
Musical pattimandram at prison
“Success after struggle gives sense of achievement”
Their numbers bring joy, love and faith
Ways to conserve power to be highlighted
Mettur level
Good response to Exnora’s ‘cool the globe’ concept
Contests mark Human Rights Day in prison
Minister’s efforts to establish zoo lauded
Nation will progress with women’s education: Vasan
In Tiruchi Today

Copyright © 2008, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu