Caught between a lingering global downturn in demand for steel since 2006 coupled with high power tariff in Chhattisgarh, the State’s mini steel plant owners feel they are now fighting their last battle for survival.
There are an estimated 200 mini steel plants in Chhattisgarh whose power supply requirements are solely dependent on the Chhattisgarh State Power Distribution Company ltd (CSPDCl). Out of the CSPDCl’s overall power supply distribution, the 200 steel plants had been its biggest consumers, President of Chhattisgarh Mini Steel Plant Association Ashok Surana stated in a letter to Chhatisgarh State Electricity Regulatory Commission (CSERC). “The irony is that during the past two years, a global downturn in the steel demand had led to 83 out of 200 mini steel plants getting fully shut between 2006 to 2012 and 54 per cent of the remaining plants are somehow operating at 50 to 60 per cent capacity,” he said. Surana stated that due to the permanent ‘demand charge’ policy of the Chhattisgarh State Electricity Board (CSEB), based on power connections, the remaining mini steel plants are neither able to close down nor run the units with minimum production due to heavy losses insured by them.
He said that there are three slabs of power tariff imposed in the State. ‘For example, the 30 mini steel plants in Raigarh are required to pay Rs 2.70 per unit plus Rs 320 KVA as ‘demand charge’. Similarly, some of the integrated steel plants incur power cost of less than Rs 3 per unit while the mini steel plants owners had been paying Rs 5.02 per unit of electricity’. ‘It appears that most of the mini steel plants which are dependent on power supply from CSEB would have to voluntarily close down which would lead to retrenchment of thousands of workers leading to a retarded growth in the development of Chhattisgarh,’ Surana said.
‘It may be mentioned that the mini steel plant owners had to file a petition with the Chhattisgarh High Court and the Appellate Tribunal in Delhi and the matter is in the final stages of disposal,’ he said. The key issues raised by the mini steel plant owners with the Appellate Tribunal in Delhi were— 1. Opposition to demand charge 2. Transmission and Distribution losses 3.Cost of supply based on voltage and two times interest levied on security deposit, he said. The Tribunal, while seriously taking cognizance of the issues iased by the Association had sought objections of the general public on March 5, 2013, Surana said. It is heartening to note that there had been no change made in the current level of power tariff in Chhattisgarh. However, it is our demand that there must be a ‘separate package ‘ for the power intensive units among the mini steel plants, he said. It may be mentioned that the mini steel plants in Chhattisgarh have to purchase raw material from the local sponge iron units for which 1,000 units of power is required to produce a tonne of iron ingots while the mini steel plants in other states and those located in the coastal areas require 600 units of power using scrap to produce the ingots, Surana said.
This way, the mini steel plants in Chhattisgarh, while utilizing 400 units of more power with an added cost of Rs 1,800 have made operations unviable, he said. The only way to save the mini steel plants in Chhattisgarh from closing down is to rationalize the power tariff, Surana said. The Association recommends that—the CSEB bring down the ‘demand charge’ from Rs 360 per KVA immediately to Rs 180 per KVA for a minimum of two years, the prevailing tariff of Rs 4.57 per unit be brought down for the mini steel plants to Rs 3.50 per unit to tide over difficult times so that they could run with minimum losses, 8 per cent electricity duty on mini steel plants be withdrawn immediately as only 35 of the units are levied duty at the rate of 28 paisa per unit , due to higher availability of power during night hours, a 30 per cent discount in power tariff be announced between 10 pm to 6 am and the hike of 10 paisa per unit made effective last year by CSEB from 5 paisa be restored to 5 paisa per unit, Surana added.