Steep hike in power tariff hits ferroalloys units

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.