Crisis-hit ferroalloys units back on track following govt. decision on power rebate

Published - October 03, 2016 05:56 pm IST

VISAKHAPATNAM: The recent decision of the State government to permit adjustment of rebate in the electricity bill has put ferroalloys units across Andhra Pradesh back on the track.

Facing high power bill, several units had either shut down their operations or scaled down their production due to recurring losses. The Cabinet decision to not insist on payment of rebate of ₹1.5 per unit of power has brought cheers among the producers. For 132 KV connection, per unit cost is ₹4.81 per unit. The rebate almost gives the industry one-third discount.

Ferro Alloys Corporation (FACOR), one of the oldest and biggest units in the State located at Garividi in backward Vizianagaram district, after a long shutdown has started maintenance work. “We are expecting to revive our operations by mid-October,” company’s CEO M.S.S. Sarma told The Hindu .

Of 34 units, 22 are now brimming with activity. Ten including FACOR have started preparatory work for revival. Other units are not operating either due to financial mess or no intention to run them, sources in the industry said.

However, though there are good signs of rising demand for ferroalloys by steel plants and other major consumers the worrying point is the steep increase in the prices of raw material. For instance, manganese ore, which is sourced from South Africa and Australia, has undergone hefty increase in price. It has increased from $1.9 per tonne to $5.3 in the past six months.

Malaysia has also remained a big threat due to increase in capacity of ferroalloys units following availability of power at ₹2.50 per unit. “Barring these factors, the pro-active measure by Andhra Pradesh has pepped up our spirit and we hope things will move favourably for us to do good business during the current fiscal,” said Maithon Alloys Ltd Senior General Manager (Commercial) Sandeep Kumar Bairoliya said.

The APERC order to collect Fuel Surcharge Adjustment from the ferroalloys units with retrospective effect had come as a rude shock to the ferroalloys producers casting a huge burden on their working capital.

“Whatever, now the State’s decision to adjust the power discount at the time of serving the bill has come as a big relief to us,” said a top official of ferroalloys factory.

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