Bengal steel units turning ‘uncompetitive’ as DVC hikes power tariff: Industry bodies

Steel and ferroalloy units in West Bengal alleged that their plants are becoming "uncompetitive due to sudden rise in power tariff" by DVC

Bengal steel units turning 'uncompetitive' as DVC hikes power tariff: Industry bodies

Kolkata: Steel and ferroalloy units in West Bengal alleged on Monday that their plants are becoming “uncompetitive due to sudden rise in power tariff” by DVC as these entities started “regulating production by 30-40 per cent” to manage cost. A body of power consumers claimed that the tariff of Damodar Valley Corporation is now charging Rs 6.5 per unit in West Bengal, which is “higher by Rs two” than that in neighbouring Jharkhand.

Situated in the Damodar river valley, the steel companies, mostly micro, small and medium enterprises, are concentrated in Asansol, Durgapur region in Paschim Burdwan district, Barjora and Mejia in Bankura and Sarbari area in Purulia.

DVC is the main electricity provider for these steel and ferroalloy units in the region.

Sudden rise in power tariff by DVC to accommodate imported coal blending cost: Steel industry

The sudden rise in tariff on two accounts- arrear collection for three years and impact of imported coal meant for blending as per a government directive – are “hurting” these companies, DVC Power Consumers of West Bengal president Subhas Chandra Agarwalla said.

“The cost of steel making in Bengal is higher by Rs 2,000 per tonne and around Rs 10,000 per tonne for ferroalloys due to the jump in power tariff. Our products are getting uncompetitive in the market when we compare with Jharkhand,” Agarwalla said.

These units are “on the verge of closure”, he claimed.

Steel Re-Rolling Mills Association Chairman Vivek Adukia said already 34 of 135 units of the body have declared that they would reduce power consumption by 30-40 per cent from October 1 as production would get “regulated in the wake of the uncompetitive power tariff”.

“Apart from the high tariff of Rs 6.5 a unit, DVC had earlier sent us notice to recover an arrear of Rs 1,500 crore linked to a period from 2017-18 to 2019-20,” he said.

Around 50,000 workers are dependent on these units, and the crisis ahead of the festive season may create problems, the industry officials said.

A DVC official said that the current power tariffs are “high due to the impact of imported coal which is used for blending with domestic fuel as per the direction of the power ministry to overcome the shortage in supply”.

The Centre had advised power generating companies to import coal for 10 percent blending, and recently, the direction has been taken back.

“The impact of imported coal on tariff is between 80 paisa and Rs 1.30 per unit. Had we not imported coal, there would have been a disruption in the power supply to these industries. This is temporary in nature and will get offset once domestic coal supply normalises,” the official said.

Imported coal blending will continue for some months until the contracted quantity is not exhausted, he added.

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