Steel industry unable to pay power bills: FAPCCI

Hyderabad, Dec 12 (INN): The Federation of Andhra Pradesh Chambers of Commerce and Industry on Wednesday stated that the Fuel Surcharge Adjustment (FSA) has pushed the steel industry in the State on the sick bed.

Addressing a press conference at Federation House, FAPCCI President Devendra Surana said that the reserves and resources of Steel and Ferro Alloys industries have been eroded due to 40 to 60 per cent power cuts over the last 16 months.

Their financial strength is so badly weakened that they are not in a position to pay the electricity bills of November, 2012, in which 35-50 per cent of normal running bill is the component of FSA.

"There is one bill in which the normal electricity bill is Rs 70 lakh whereas the FSA component amounts to Rs 35 lakh. In another bill, the normal electricity bill is Rs 4 crore whereas, the FSA component constitutes as much as Rs 1.41 crore," he said.

Surana said that the steel Industry was power intensive and it constitutes about 40 per cent of the cost of production. Owing to the power cuts in the last 16 months, the production and sale of the steel industry have declined drastically.

The Industry was just maintaining the production and sale at the breakeven level where their revenues are equal to their expenses. Thus, they do not have any surpluses to meet the additional billing of FSA component and that to large amounts varying from Rs 35 lakh to Rs 1.5 - 2 cores, he said.

The FAPCCI president said that it was due to weakened financial position that the steel industry was unable to pay the electricity bills of November, the last date of which was December 10.

"The serious financial crisis has pushed the entire industry to the threshold of closure unless some immediate remedial measures are initiated both by the government and the industry," he said.

Surana said with an investment of Rs 10,000 crore, the Steel industry directly employees about one lakh people. It also supports the downstream industries which have investments worth Rs 100,000 crore and employees about 10 lakh people.

The Steel Industry contributes about Rs 1,000 crore towards payment of electricity charges, Rs 1500 crore towards Excise Duty and Rs 500 crore towards VAT per annum.

"Once the industry is forced to close down on account of external conditions such as high FSA charges, low power supply or high quantum of power cuts, the adverse impact will be on the economy of the State and employment," the FAPCCI president said.

FAPCCI Secretary General MV Rajeshwara Rao and other officials were also present.