The State Government has given its nod for exemptions to Ferro Alloys units in the state, as they had been shutting down one after the other due to increasing losses.
High power tariff and lack of support from the government were bane of the ferro alloys units in Andhra Pradesh, but this decision by the State Government to supply power to their units on subsidy will go a long way in reviving the industry. Ferro alloys is a power intensive industry and the ferro alloy units had been pushed into a crisis over the last two-three years, as power tariff increased steeply in the state.
The power tariff for the industry is in the range of INR 4.81 to 5.23 per unit, at present. However, based on the Cabinet sub-committee recommendations submitted to the government, they have decided to supply power to these units by subsidising the rate by INR 1.5/unit for the duration of one year. The cost on power to produce one tonne of Silico Manganese, Ferro Manganese, and Ferro Silicon is approximately INR 4000, 3000, and 8000 respectively.
It might be recalled, Andhra Pradesh Ferro-alloys Producers’ Association (APFPA) had urged the State government to supply power to their units on subsidy and save them. They were requesting the government to bring down the tariff to INR 2.65 a unit, to ensure that the industry survives in the State. SteelMint managed to get a word with Mr. S. De Sarkar, CEO – Abhijeet Ferro-Tech Limited, one of the major producers in the country. “We welcome the decision by our state government in providing us with a level playing field to compete in the international markets,” he said on the power subsidy to Ferro alloy units in Andhra Pradesh. He also highlighted how a steep hike in power tariff over the past few years had forced companies to declare lockout.
Power is the most essential source for the ferro alloy units which spend about 35 to 60 per cent of their production cost on power. Another favorable thing for ferro alloy industry units in Andhra Pradesh is the close proximity to the port. This is an added advantage along with lowest cost of production in India, as they supply products to buyers both in India and abroad, and also import manganese ore. According to sources, the state government also decided to request the Centre for grant of exemption of central excise duty to Ferro alloys industries. The state government will also give exemption of VAT etc to these industries. SteelMint assessed that along with increased prices for ferro alloy products in the market a reduction in power cost will surely revitalize the ferro industry in Andhra Pradesh.
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