AP secondary steel units default on power bills

The 1-million tonne secondary steel manufacturing industry in Andhra Pradesh has refused to pay power bills due on December 10 protesting the fuel surcharge adjustment (FSA) being levied across the consumers by the state power utilities.

With the mills running just at 35 per cent of the capacity due to severe power cuts for the past 16 months, the power-intensive steel sector is no position to pay FSA, which is coming to an additional burden of Rs 90 crore a month, according to the Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci).

Fapcci president Devedra Surana said the steel industry was on the verge of collapse because of power shortage. The present round of FSA related to the power supplied to the consumers in the first quarter of this year.

He said the FSA at Rs 1.32 per unit being charged by the power utilities had no correlation with either the quantum of power consumed by the industry or the variation in fuel costs. The higher FSA was arrived at by including various other factors such as cross subsidy and capital costs and, therefore, it was unreasonable to ask the industry to pay.

"We cannot recover this additional cost from the customers as we have already sold the products made in the previous months. We have no other option but to close down the operations if the discoms insist on paying the FSA," Suresh Kumar Singhal, chairman , South Central Region of the All India Induction Furnaces Association told the media.

About 100 secondary steel mills and another 25 ferro alloys units are operating in the state. Of this, the secondary steel units together contribute Rs 1,000 crore towards payment of electricity charges, Rs 1,500 crore towards excise duty and Rs 500 crore towards VAT every year, according to the association.