Odisha industries decry steep electricity duty hike for CPPs

Industries in Odisha today decried the steep hike of 83 per cent in electricity duty for Captive Power Plants (CPPs) saying it will hamper investment and urged the state government for a roll back.
Prominent industries including NALCO, JSPL, Vedanta, HINDALCO, PPL, MCL, JSL, IMFA, Nava Bharat, Tata Steel, Tata Iron and Sponge, FACOR and MAITHAN as well as representatives of associations like CII, UCCI, Captive Power Plant Federation, FICCI and Aluminium Association of India had a consultative meeting on the recent hike in electricity duty for CPPs.
Confederation of power producers, AAI and others made a presentation on damaging implications of the hike on industries in Odisha as well as the investment climate in the state, said chairman of CII, Odisha and CMD of NALCO Tapan Kumar Chand, who chaired the meeting.

The hike of electricity duty from Rs 0.30/kwh to Rs 0.55/kwh will increase the cost of production in the state by Rs 4,000 per tonne in case of aluminium and to Rs 400 per tonne in case of steel, Chand said in a statement.
It will make industries in Odisha un-competitive, severely eroding the competitiveness of products produced in Odisha as compared to that of other neighbouring states and overseas, it said adding, such hike at a time when domestic and international markets are going through a sluggish cycle, has been decried by industry representatives.
They have termed the hike as inappropriate and uncalled for and requested industry bodies to take up with the state government to roll back the steep hike, it said.

Noting that the Captive Power Plant Federation has already moved court and has obtained an interim order to keep the differential increased amount in a separate account till disposal of the case, industry bodies felt that the government should rethink and revisit the issue.

Pleading for a roll back, the industries pointed out that all neighbouring states with whom the products of Odisha compete in domestic market, have electricity duty within the range of 0 per cent in Andhra Pradesh and Telangana to 32 per cent in Chhattisgarh.
Moreover, GST rollouts are scheduled on July 1, and GST being a destination based tax with consumption as the criteria for receipt of revenue, Odisha needs to develop as a consumption hub and a market hub to avail benefits under GST and this can be possible only with industry making end use products in Odisha in a given cost competitive climate, the statement said.

The MSME sector, which is in the priority list of the government, will also be hit hard by the duty hike, it said.
Domestic and international markets being in a down turn cycle, this is not the appropriate time for such steep hike, the statement said adding, this will be a wrong signal to prospective investors as existing investors will have a different story to tell.
In the current market scenario, many CPPs are not running in full capacity, roughly 30 to 40 per cent are struggling to survive, it said.
The increase in the cost of power input will have a negative impact on export, employment generation and revenue earning, leading to migration of downstream industries to neighbouring states, it added.