Stop cross-subsidisation of power, Ifapa urges state govts

The Indian Ferro Alloys Producers Association (Ifapa) demanded that state governments stop the cross-subsidisation of power and pointed that such a move would help in doubling of exports to Rs 1,000 crore. Ifapa also urged the government to cut import duty on raw materials to five per cent from the existing 10 per cent.

Ifapa said that power for manufacturing units should be supplied at generation cost plus reasonable wheeling charges. "The continuation of cross-subsidisation of power tariffs in the country is posing a major problem for the ferro alloys manufacturers because they are paying close to Rs 2.25 to Rs 2.50 per unit to the transmission companies while our global competitors get power at less than Rs 1.50 per unit," P Roy, the chairman of Ifapa, said at the inaugural session of the two-day international symposium "� 'Ist Ferro-Alloys India', which began here today.

"Electricity accounts for over 40 to 70 per cent of our production cost, depending on the type of ferro alloys that are produced. We cannot compete effectively in the export market primarily due to the higher cost of the electricity," Roy said.

Ifapa has also urged the government to create a level playing field by supplying power at tariffs on par with international rates, ie, at about Re 1 to Rs 1.50 per unit.

"The Electricity Act 2003 encourages ferro alloy producers to go in for captive power plants. However, the capital required to set up a power plant is five times more than that of installing an electric furnace which makes it prohibitive for the small units,"said T S Sundaresan, secretary general, Ifapa.

There are about 105 ferro alloys manufacturing units in the country with a total installed capacity of two million tonnes per annum. At present, the industry utilises about 50 per cent of the two million tonnes of installed capacity and exports about 35 per cent of the produce every year.

During the last fiscal, production grew by about 23 per cent to 1.02 million tonne from 0.83 million tonne in the previous year.