Andhra Ferro Alloy factories shutting shop owing to steep power tariffs

Andhra Ferro Alloy factories shutting shop owing to steep power tariffs

Unable to withstand competition from neighbouring states owing to a steep hike in power tariff that is increasing their costs of production, Ferro Alloy factories in Andhra Pradesh are on the verge of closure.

Few Ferro Alloy factories in Andhra Pradesh have ceased operations and only yesterday, another private company Ms Deccan Ferro Alloys Pvt Limited located at Kottavalasa in Vzizianagaram district hung a “closed” board on its main gate citing inability to manage due to exorbitant power tariffs in the state. At least 100 regular workers and 100 contract workers of this company have been thrown out of jobs due to this closure.

In fact, many other Ferro Alloy factories in the state are in similar precarious position and all the industries’ pleas for a tariff reduction have fallen on deaf ears. Incidentally, the management of the Kottavalasa factory had conveyed its decision to close the factory from July first week in a letter to the government last month itself, local media reports said.

The district collector Nagalakshmi has been informed of the company’s decision through a letter. The company claimed that not only the manufacturing costs had risen, also on account of steep tariff hikes, but also the prices of ferro alloys have fallen globally as well as in the domestic market, which was making the Andhra companies uncompetitive.

The Kottavalasa factory listed out these reasons in its letter informing the government of the closure of its factory, also because it was unable to compete with companies from Jharkhand, Chattisgarh, and West Bengal. Sources in the company said that it may rethink on its manufacturing if the government worked out some relief and brought down power tariffs.

Many factories may follow suit

Over thirty such factories engaged in ferro alloys metal are also finding it difficult to continue operations and may have no other option but to temporarily halt operations.

Industry sources say that before YSRCP came to power four years ago, power charges for the industry were Rs 4.95 per unit and this commercial rates were hiked to Rs 7.89 per unit. This near doubling of power tariff has led to a corresponding steep increase in production costs of the alloy. Companies that export the metal are finding it unable to compete in the international market as well and losing out.

According to industry sources, some 8 units have already shut down operations and few more are contemplating closing later this month. Another company, also in Vizianagaram district, has put up a notice at its factory that it was finding it difficult to manage the company due to increase in electricity charges since April and also the fall in market price for alloys is also having its own adverse impact.

Karnataka too facing similar problem

Incidentally, small and medium industries in Karnataka too are experiencing similar issues due to high power tariffs and are demanding a roll back of the electricity charges. The government, instead of easing the prices, has announced an across the board hike of electricity charges for household and industrial use. Several smaller industrial units had closed down and many face an uncertain future and could close down, trade and industry bodies say.

Lakshmana Venkat Kuchi

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