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High tariff makes ferro units powerless
Telangana and Andhra Pradesh governments, which claimed to have adopted the best industrial policy in the country, threw the energy intensified ferroalloy industry in to dire straits. Unable to bear the burden of ‘hefty’ tariff imposed on power consumption, all the 45 ferroalloy industries -- 35 in AP and 10 in Telangana -- were closed down. Nearly 50,000 employees in two states were laid off.
Hyderabad: Telangana and Andhra Pradesh governments, which claimed to have adopted the best industrial policy in the country, threw the energy intensified ferroalloy industry in to dire straits. Unable to bear the burden of ‘hefty’ tariff imposed on power consumption, all the 45 ferroalloy industries -- 35 in AP and 10 in Telangana -- were closed down. Nearly 50,000 employees in two states were laid off.
45 industries shut down in AP & TS
The managements of the industry have been demanding AP and TS governments to reduce power tariff as the companies fell in a debt trap due to the heavy tariff burden since 2012. About 60 per cent of the expenditure incurred by the industry for production goes for payment of power bills alone.
Kiran Kumar Reddy headed government had increased tariff to Rs 4.80 from Rs 2.65 per unit for the industrial category. The same tariff structure has been in force for the specific industry even after bifurcation of Andhra Pradesh. The power requirement for the ferroalloy industry in Telangana is 74 MW and the total energy consumption in AP is nearly 400 MW per year. All ten units, including the first ferroalloy plant – PVC company in Medak district, which was established 50 years ago, also stopped production for the last three months.
Five units in Nalgonda, three in Mahbubnagar and one unit in Nizamabad were closed down rendering nearly 7,000 workers go jobless in Telangana. In Andhra Pradesh, 35 companies located in Visakhapatnam, Srikakulam and Vizianagaram which have employed 45,000 people have stopped the production of ferrosilicon, ferrochrome and silicomanganese used for the manufacturing of different metal utilities.
Nearly 60 per cent of the production was being exported to North Korea, Japan and Indonesia by these companies and the remaining 40 per cent was supplied to the domestic market. With the stoppage of production, officials said both the Telugu-speaking states have lost revenue generated through exports.
The increased production cost due to high power tariff in the last four years opened doors for companies in Odisha and Chhattisgarh to supply products at cheaper prices in the markets. Power tariff in the neighbouring two states is almost 50 per cent less compared to AP and Telangana. As a result, the ferroalloy trade in both the states reached its rock bottom, according to AP Ferro Alloy Producers’ Association secretary-general M R Prasad.
The only demand put before both the governments after division of state was to bring back the old tariff structure to protect the industry from extinction. At present, AP government is charging Rs 4.81 per unit and Telangana is collecting Rs 4.80. Several representations have been made to governments to address the long-pending issues, but in vain.
Though the AP government agreed to reduce tariff at a recent meeting, no action has been taken so far.Telangana Industries Minister J Krishna Rao also held meetings with the company representatives recently and the association members said that the fate of the companies was in the hands of both the Telugu-speaking governments.
