Steep hike in power tariff hits ferroalloys units

May 28, 2015 12:00 am | Updated 06:07 am IST - VISAKHAPATNAM:

Exorbitant increase in power tariff over past few years is crippling the ferroalloys units in Andhra Pradesh.

Of 38 small, medium and big units producing silicon manganese, ferrochrome and ferrosilicon with a total production capacity of eight lakh per annum, only eight are fully operational and 12 are operating at 50 per cent of their capacity. Power is the main raw material for ferroalloys industries and the cost which used to be Rs.2.65 in March 2012 has increased to Rs.4.87 per unit from April 1.

The ferroalloys units, which supply their products to steel manufacturers both in India and foreign countries, spend 35 to 70 per cent of their production cost depending on their size of operation on power. Industry sources told The Hindu that an investment of Rs.2,000 crore was made in the sector in response to promises made by the undivided AP since 2010. “Not only power tariff is pinching us a lot, we are also burdened with fuel surcharge adjustment and deemed consumption charges making our operations unviable,” Ravi Singhal, Director of Berry Alloys Ltd told The Hindu .

The unit set up by him at Bobbili with an investment of Rs.50 crore four years ago and a capacity of 35,000 tonnes per annum, is now being operated at half the capacity due to high power tariff cost. He said the industry used to demand uninterrupted power supply before bifurcation. “Now power supply is not a problem but low returns is making us sick,” he said.

The State’s ferroalloys units employ 10,000 workers directly and 20,000 to 30,000 indirectly. It is also a major foreign exchange earner and among top three container consignments being sent from Visakhapatnam Port.

The problem is complex for small entrepreneurs as they run their units with single furnace ruling out the possibility to scale down their operation. “I am not able to decide to run my unit set up in 2012 at Bobbili with an investment of Rs.18 crore or shut it down”, Vidhan Mittal, MD of MDA Mineral Dhatu, said.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.