The owners of all mini steel plants in Chhattisgarh finally closed production and went for a lock-out at their respective units from Saturday while demanding a sharp cut in the power tariff.
The State which prided itself with the largest number of mini steel plants numbering 200 in the country have its owners now fighting a battle for survival with the units concentrated in the districts of Raipur, Korba, Bilaspur and Raigarh.
The strike will now lead to raw material production losses of Rs 25 lakh per day besides rendering 50,000 employees jobless, President of Chhattisgarh Mini Steel Plant Association Ashok Surana told The Pioneer over telephone.
He said that it is the mini steel plants which had been paying Rs 100 cr of Excise duty to the State Government besides addtionally paying Central Sales Tax (CST) and Value Added Tax (VAT) amounting to Rs 50 crore every year to the Union Government. ‘Despite paying such a large quantum of taxes, it is ironical that the State Government has not paid any attention to reducing the power tariff for the mini steel units, he said.
Surana said that the strike would have a casacading effect on other units such as Sponge Iron manufacturers and the Rolling mills which would start close down after receiving no raw material from the mini steel plants in Chhattisgarh, Surana said.
The families of 50,000 employees are going to suffer directly from the closure in a year when the State Government is going to polls, he stated. The Association had sought an appoint with CM Raman Singh to apprise him of the problems being faced by the mini steel plant owners as well as demand a sharp cut in the power tariff to resume production.
During the past two years, a global downturn in the steel demand had led to 83 out of 200 mini steel plants getting fully closed between 2006 to 2012 and 54 per cent of the remaining plants are somehow running at 50 to 60 per cent capacity, Surana had stated in a letter to Chhatisgarh State Electricity Regulatory Commission (CSERC) early this month before announcing closure of all units yesterday .
He had further stated in the letter 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 insure power cost of less than Rs 3 per unit while the mini steel plants owners had been paying Rs 5.02 per unit’.
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 using 400 units more power with an added cost of Rs 1,800 have made their operations unviable, he said. The only option to save the mini steel plants in Chhattisgarh from closing down permanently is to rationalise the power tariff, Surana stated.
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 insure power cost of less than Rs 3 per unit while the mini steel plants owners had been paying Rs 5.02 per unit’.
The Assciation recommended that—the CSEB brings down the ‘demand charge’ from Rs 360 per KVA immediately to Rs 180 per KVA for a minimum of two years, the prevailing tatiff of Rs 4.57 per unit be broght 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 electrcity 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 in the letter.