Companies in Gujarat incur lower production and revenue loss as power shortages in the State are negligible, reveals a survey. Also at an advantage are companies in Karnataka belonging to the IT-enabled services sector, which is not as power intensive as iron and steel, aluminium, etc.

A survey by FICCI and the Bureau of Research on Industry and Economic Fundamentals (BRIEF) on the ‘Lack Of Affordable and Quality Power: Shackling India’s Growth Story’ shows that Maharashtra, which has a mix of IT and manufacturing companies, also does not suffer as acutely from power shortages as some of the other States.

Power Shortage

Almost 32 per cent of industrial units across India face power shortage of 10 hours a week and about 61 per cent of firms suffer above 10 per cent shortfall in production due to power cuts.

The study further reveals that 13 per cent of firms suffer a 2-5 per cent shortfall in production, 12 per cent suffer 6-10 per cent and only 14 per cent, mainly in Gujarat, Karnataka and Maharashtra, suffer less than 2 per cent production loss. This is assuming that the firms do not rely on power back-up units to ensure continuous production activity, it says.

650 cos in 20 States

The survey was conducted over the last three months and covered 650 large, medium and small industries in 20 States. Of the 650 companies interviewed, 67 per cent were privately owned and 28 per cent were either private partnership or individual ownerships. Only 3 per cent of the total sample were public sector or Government-run units and 2 per cent were from the multinational corporation category.

Facing cost escalation

The survey notes that firms are facing cost escalation, revenue loss, increased fuel consumption, increased investment in captive facilities, higher inventory costs and loss in competitiveness that are detrimental to the health and stability of the Indian industry.

Almost two-thirds of the firms in the Indian industry feel that because of the power shortage and intermittent supply, they are losing to their international competitors and thus losing their previously captured international markets.

The survey notes that 54 per cent of companies were aware in advance of the load-shedding schedule.

The revenue loss on account of power cuts ranges between less than Rs 1,000 to above Rs 40,000, with the majority of companies in Gujarat, Karnataka and Maharashtra losing less than Rs 1,000, the survey says.

Further, 57 per cent of the firms are of the view that cost of electricity will increase in the next six months, while 43 per cent believe that it will remain the same.

Recommendations:

Based on the findings the survey has recommended a 10-point policy package for industrial consumers: These include increasing the capacity of installed sources; ensuring communication to load dispatch centres; and an extensive review and audit of the protection systems.

It further suggests implementation of smart grid and grant of open access option to consumers, which will allow bulk consumers to choose their distributors.

Use of alternate sources of power generation must be encouraged, it says, adding that ‘green’ architecture or building should be incentivised so that conventional energy usage can be minimised.

Creation of industrial cooperatives that can source electricity or have a dedicated captive generation source have also been advocated, along with providing clear public information on power cuts.

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