Chhattisgarh mini steel plants shut down in protest against power tariff hike
The Chhattisgarh State Electricity Regulatory Commission had recently hiked the power tariff by 8.3%, effective from June 1
Around 200 mini steel plants in Chhattisgarh have shut down indefinitely on Tuesday in protest against the power tariff hike in the state.
The Chhattisgarh State Electricity Regulatory Commission (CSERC) had recently hiked the power tariff by 8.3%, effective from June 1. The mini steel plant owners claimed that the hike has made it infeasible for them to run their units.
Manish Dhuppad, General Secretary, Chhattisgarh Mini Steel Plant Association said that the steel industry operates on thin margins and high volumes and the hike has made it infeasible to run the units.
The steel industries had been paying ₹6.10 per unit of electricity, but the rate has now increased to ₹7.60 per unit from June 1 this year, Dhuppad said.
“A recent ₹2 hike in electricity tariffs has significantly increased our costs, leading to a financial burden amounting to crores. This makes it impossible to compete with states like Odisha and Madhya Pradesh, where electricity is cheaper,” said Dhuppad
He further said that despite being a producing state, Chhattisgarh’s steel products are now uncompetitive.
“This hike will severely impact our revenue and GST contributions, leading to potential shutdowns of our units. We contribute significantly to government revenue and employ around 2 lakh people, who will also face losses. Chhattisgarh will be the most affected,” Dhuppad added.
Anil Nachrani, president of the Chhattisgarh sponge iron manufacturers association said, “ Since the industry operates in shifts, the shutdown will happen overnight. All high-power industries, including mini steel plants and ferroalloy units, will be closed. The first phase of the impact will hit sectors that work in a chain process. The first industrial chain produces sponge iron, the second melts it to make ingots and pellets, and the third uses rolling mills to make rebar, angles and channels. The second industrial chain, which has the highest power consumption, will be the most affected. Its shutdown will impact 150-200 industries initially, but if the problem is not resolved, it will escalate. This will not only harm the industries but also reduce government revenue and increase unemployment, leading to a severe crisis.”
Comparing the tariff with other states, Nachrani said that Chhattisgarh’s comparison is with states where steel production is higher, like Odisha, where electricity costs ₹5 per unit and West Bengal, where power from Damodar Valley Corporation costs ₹4.91 per unit.
“Even in Chhattisgarh, at Jindal Park, electricity costs ₹5 per unit, but the state government charges ₹7.62 per unit,” he added.
The association had demanded ₹1.40 per unit subsidy (in power tariff) for five years to steel industries and exemption from the electricity duty which is currently 8%, for 15 years, he added.
Mini steel plants produce raw materials from sponge iron, including TMT bars and steel rods.
Meanwhile, an official of the Chhattisgarh State Power Distribution Company Limited in statement said that the tariff has been nominally hiked as compared to the rise in inflation rate in the last eight years.
“The CSERC had increased the energy charge of high voltage steel industries by only 25 paise (4.10 percent) and fixed at ₹6.35 per unit from June (which was earlier ₹6.10). The rebate on load factor has been reduced from 25% to 10%, so that consumers of other categories and socio-economical priority would not have to bear the burden,” the statement said.
It further said that the high voltage steel industries are still being given a rebate of ₹713 crore through the rebate on load factor in the tariff and this rebate is not given to any other category of consumers, he added.
“The energy charge was at ₹6 per unit in the state in 2017-18 for steel industries which has now reached only ₹6.35 per unit, while it is at ₹8.36 in Maharashtra, ₹8.10 in Telangana and ₹7.15 in Madhya Pradesh,” the statement added.