Ferro alloys producers crippled by soaring input costs, especially coking coal, can expect about of relief from Odisha that is actively considering a proposal to offer them subsidy on power tariff.
Citing steep cost of power compared to neighbouring states like Andhra Pradesh and Chhattisgarh, the ferro alloy makers had pleaded to the Odisha government to announce a subsidy of Rs two per unit of electricity consumed. Neighbouring Andhra Pradesh has already declared a subsidy of Rs 1.50 per unit, scaling down the power tariff for ferro alloys industry to Rs 3.31 per unit compared with Odisha which is still ruling high at Rs 5.40 per unit. Even Chhattisgarh’s power tariff for such units was lower at Rs 4.90 per unit.
“There was a submission by the ferro alloys industry for a subsidy on power. We are looking at different possibilities and are in consultation with the relevant government departments”, said a senior government official.
Ferro alloys manufacturing is a power intensive industry. Depending on the grade of alloy churned out, power contributes up to 45% of the production cost.
Ranjan Mishra, executive director at Visa Steel said, “Hardening coking coal prices has hit the ferro chrome producers. Price of other raw materials like chrome ore has also firmed up. Now, our focus is on pruning input cost. Any subsidy on power consumed would be of substantial help to the ferro alloys industry in Odisha.”
For producing 1 MnT of ferro alloys, 3600 units of electricity is consumed. High electricity tariff in Odisha was the key reason for escalating production cost of ferro alloys.
State power regulator- Odisha Electricity Regulatory Commission (OERC) has determined a common tariff for all industries availing power supply at EHT (132 KV and above) and HT (11 & 33 KV). Odisha has no separate tariff for power intensive industries producing ferro alloys unlike Andhra Pradesh and Chhattisgarh. Since 2010-11, there has been a sharp increase in the tariff applicable to HT and EHT industries. The EHT tariff has shot up from Rs 3.79 per unit in 2010-11 to Rs 5.40 a unit in 2015-16. The HT tariff in the comparable period rose from Rs 3.84 to Rs 5.45 per unit.
Most of the ferro alloys producers in Odisha were receiving power at EHT rates. The industries fear that while their counterparts in Andhra Pradesh would operate at near full capacity due to the declared subsidy, many of the units in Odisha would have to go for curtailed capacities.
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