Business Standard reported that several ferroalloy producers and secondary steel makers in Andhra Pradesh has refused to pay power bills due on December 10th protesting the fuel surcharge adjustment being levied across the consumers by the state power utilities.

According to the Federation of Andhra Pradesh Chambers of Commerce and Industry, with the mills running just at 35% 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 INR 90 crore a month.

Mr Devedra Surana president of FAPCCI said that 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 Q1 of this year.

Mr Surana said that the FSA at INR 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.

Mr Suresh Kumar Singhal chairman of South Central Region of the All India Induction Furnaces Association said that "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."

According to the association, about 100 secondary steel mills and another 25 ferroalloys units are operating in the state. Of this, the secondary steel units together contribute INR 1,000 crore towards payment of electricity charges, INR 1,500 crore towards excise duty and INR 500 crore towards VAT every year.

Source - Business Standard