Industries hit hard by power tariff hike

Stakeholders in the industrial sector in Mysore and surrounding regions are dismayed by the hike in power tariff effected by the Karnataka Electricity Regulatory Commission (KERC).

The hike, which came into effect on April 30, is expected to hit industries hard as this is the second upward revision in power tariff in the last six months.

Suresh Kumar Jain, State vice-president, Karnataka Laghu Udyog Bharati, told

The Hindu that the increase in power tariff would deliver a crippling blow to the industrial sector.

“The hike for industries is 20 paise per unit. But in October 2011, there was an upward revision by 28 paise. Therefore, the net hike for industries in the last six months has been 48 paise per unit,” said Mr. Jain.

“The hike comes at a time when business is picking up after the economic slowdown,” he added.

Double whammy

The power tariff hike has come as a double whammy for the industrial sector as production in Mysore-based ancillary units was affected during February/March this year.

“Though the Chamundeshwari Electricity Supply Corporation (CESC) ensured adequate power supply this summer, these units were not able to work at full capacity due to lack of orders from Coimbatore as Tamil Nadu was reeling under a power shortage,” Mr. Jain explained.

Effect on SMEs

There are nearly 25,000 small, micro and medium enterprises in Mysore district in addition to about 100 large industries. However, stakeholders pointed out that 25 per cent of the SMEs were sick, while another 20 per cent had closed down. Of the remaining 55 per cent, 25 per cent of the units were tottering and only 30 per cent of the units were functioning.

Hence, there was a fear that the revised tariff would deliver a severe blow to SMEs.

“The new tariff rates are really high for industries to bear and it will be passed on to consumers ultimately. There is a general perception that the hike should not have been effected at this juncture,” said Sudhakar Shetty, president of the Mysore Chamber of Commerce and Industry (MCCI).

The majority of SMEs in Mysore are either manufacturing or foundry units and are heavily dependent on continuous power usage. In view of the high power consumption, their electricity bill is skyrocketing and a majority of these units being loss-making ventures do not have the capacity to pay the revised tariff, according to S. Bhanuchandran, an industrial consultant.

Members of the Mysore Industries Association (MIA) said the government should reject the KERC recommendations and stall its implementation.

They have pleaded for power supply to small and micro industries at the purchase cost incurred by Escoms.

The MIA, MCCI and other stakeholders have also rued the policy of cross-subsidisation followed by the government under which industries are levied a higher tariff to recover the difference in amount arising out of supplying power at subsidised rates to the beneficiaries of various schemes such as Bhagya Jyothi.

“The government should pay the Escoms the difference. Industries should not be made to pay,” said Mr. Jain.