Chhattisgarh mini steel plants demand package to shut down

Mini steel plants in Chhattisgarh are demanding packages, ironically, not for survival but for closure of their units that have been passing through worst-ever crises.

The 175-odd mini steel plants in the state are on the verge of closure. But industrialists are helpless to shut down the units. They require paying the minimum electricity charges even if the unit closed down production and fail to consume even a unit of power.

A mini steel plant paying an electricity bill of Rs 50 lakh per month when on full scale production will be required to pay Rs 12 lakh every month as fixed demand charges even if it failed to consume a single unit of power, state's sponge manufacturers association President Anil Nachrani said.

The minimum charge is applicable on the industrial units that come in the category of High Tension (HT) consumers as per the Electricity Act. The industrials are demanding that the fixed demand charges levied at Rs 310 per kilovolt amperes (KVA) kilovolt amperes should be curtailed to Rs 155 per KVA.

The state government would have to incur a huge loss of over Rs 180 crore if the charge was curtailed to half, state's energy secretary Aman Singh told Business Standard. "Still, the state government is examining the plea of the industrialists before taking any decision to announce package," he added.

The steel makers are demanding package from the state government to bail out from the present crises. According to Nachrani, 50 of the 175 mini steels plants have already closed production while the remaining have curtailed production by 50 per cent.

The conversion loss while making finished goods and high price of iron ore had been the reasons for plunging the steel plants in Chhattisgarh into deep crises. "The finished goods are not getting reasonable price as compared to the conversion (production) cost," Nachrani said.

Industrialists are willing to close down the units if the state government curtails the electricity charge. They believe that if they fail to earn (by continue with the production), it is wiser not to bear the loss by paying electricity charges.