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Dilip Bisoi
Bhubaneswar, Oct 16: The high cost of power in Orissa is likely to force many ferro-alloys companies to down shutters. Expressing resentment over the increasing cost of power, the four major ferro-alloys manufacturers in the state -- Tisco, Facor, Ispat Alloys and Nava Bharat Ferro Alloys -- have urged the Orissa Electricity Regulatory Commission to fix a separate tariff for mineral-based EHT power consumers.
The ferro-alloys manufacturers say that because of the high power cost, their units are unable to compete in the global market. They point out that despite a slide in prices, Orissa's product has a price advantage of $20 per tonne over South Africa's product because of a lower freight charges from India to the US. South Africa is the world leader in ferro-alloys production.
However, the increasing power cost is eating into their margin rendering their units uneconomical. In the domestic market, the prices of ferro-chrome and silico-manganese have come down to Rs 20,500 and Rs 20,700 per tonne,respectively, this month from Rs 27,500 and Rs 23,500 in July. In the global market, the price of silico-manganese has come down to US $428 per tonne from US $570.
Because of a high power cost, several ferro-alloys plants in Madhya Pradesh, Karnataka and Maharashtra have been closed down in recent years. In Madhya Pradesh where the power cost is Rs 3.40 per unit, 25 out of the 31 plants have closed down.
In Maharashtra, unable to absorb the electricity cost of Rs 3.37 per unit, UNIFerro Alloys shut down four of its furnaces (51mva capacity).
In Karnataka, Sandur Manganese & Iron Ores Ltd shut down three furnaces as operation become unviable owing to a high power cost of Rs 4 per unit.
In Andhra Pradesh, where the power cost is Rs 3.80 per unit, some manufacturers are surviving with NTPC power which is available round-the-clock at a cost of Rs 1.20 to Rs 1.30 per unit.
The per-unit cost in Orissa works out to be as high as Rs 3.15 for power-intensive units and because of this Facor, despite havingmines and a good capacity for production, incurred a cumulative loss of Rs 125 crore and then became a Board for Industrial & Financial Reconstruction (BIFR) case. Other units are struggling to survive with captive generation of power, manufacturers point out.
Ispat Alloys executive director M Mukhopadhyay, who presented the case of Orissa ferro-alloys manufacturers before the Orissa State Electricity Regulatory Commission (OERC), says the average energy cost should not exceed Rs 1.40 per unit as the product cannot absorb any price higher than this.
The OERC is now conducting a public hearing on Gridco's proposal to effect a power tariff hike by about 12 per cent across the board.
Mukhopadhyay suggests that a variable power tariff related to the ferro-chrome price at the international level be introduced in the state for the ferro-alloys industry. In South Africa the power tariff is related to the international ferro-chrome price.
Pointing out that the present tariff is loaded in favour of the Gridco,he says: "Bills for power which is of poor quality (with frequency variation of +/- 3 per cent) should not be passed for payment. Rather an amount of 20 per cent of the cost of substandard power should be charged as penalty to the supplier for damaging the equipment."
He also says that the transmission losses and wheeling charges should be in accordance with the recommendations of Power Grid Corporation of India Ltd and the guidelines of Central Electricity Authority and that the charges should not exceed 20 paise per unit.
At present Gridco is billing the transmission tariff with wheeling charges of Rs 0.40 per unit and 7.5 per cent transmission loss.
Objecting to the Gridco's proposal to hike tariff, chief resident executive of Tisco, Nanda Patnaik, says industry planning would go haywire if the power rates are upwardly revised every year. He also says the high cost of power and substandard supply are the two major reasons for the industrial sickness in the state.
Representatives of Facor and NavaBharat Ferro Alloys say their units have lost viability because of the high power cost. T C Hota of ICCL has contested the Gridco's projected transmission loss at 5.3 per cent for EHT consumers in 1988-99. He laid stress on quality supply and grid discipline.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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