FSA burden threatens to derail nearly 200 units in State

Nearly 200 steel and ferro alloys units in Andhra Pradesh would face closure unless the State government came to their rescue by rolling back the Fuel Surcharge Adjustment (FSA) charges, Devendra Surana, president FAPCCI and Suresh Kumar Singhal, Chairman, All India Induction Furnaces Association, South Central Region said here on Wednesday.

Addressing a press conference, Mr. Surana, Mr. Singhal and representatives from ferro alloys industries said the steel units were working at 35 per cent of their total capacity and the ferro alloys at 50 per cent for the past 16 months due to power cuts.

They were already on sick list and not in a position to pay the electricity bills of November, 2010 as the FSA component alone ranged from 35 per cent to 50 per cent of the bills.

The FSA charges were casting an additional burden of Rs.100 crore a month and as many as 150 units had not paid their electricity bills by the last date (December 10) of this month.

In one instance, the FSA amount was half of the total electricity bill of Rs.70 lakhs. In another instance, the bill was Rs. 4 crore, while the FSA component was Rs.1.41 lakh. They said the FSA charges at Rs.1.32 per unit were irrational and the actual rate as per the increase in fuel cost would not be more than 30 paise per unit.

Pointing out that steel and ferro alloys units were power intensive, they said “ if the government did not come to our rescue, the industries will be closed and lakhs of people will be rendered jobless”.

Even as the production in steel units declined, they were facing severe competition from neighbouring States which were exporting to Andhra Pradesh.

They said that the total investment in the steel industry in the State was to the tune of Rs.10,000 crore and it provided direct employment to 1 lakh people.

It was paying electricity charges of Rs.1,000 crore per annum, besides Rs.1500 crore towards excise duty and Rs.500 crore for VAT. The industry was supporting downstream industries whose investments would be around Rs. 1,00,000 crore.

P.S.R. Raju of Deccan Ferro Alloys Private Limited said power was the main raw material for ferro alloys units and the FSA charges comprised 35 per cent of the total electricity tariff. He urged the government to bear 50 per cent of the FSA charges.

  • Many units not in a position to pay bills of Nov. 2010 as FSA alone ranged from 35 % to 50 % of the bills

  • ‘Rs.1.32 FSA per unit irrational; actual rate as per rise in fuel cost will not be more than 30 paise’