Ferro alloy and secondary steel makers in Andhra Pradesh are either cutting production or mulling over a shutdown in the wake of a hike in power tariff and the “irrational” imposition of Fuel Surcharge Adjustment by the State Government.

At least four of the 31 ferro alloys units in the State, which account for 30 per cent of India’s production of this vital raw material for the steel industry, have shut down their facilities.  “Another 10 to 15 are seriously contemplating stopping production as the power bills have made their operations unviable.  Power accounts for 40-70 per cent of the cost of production,” M. R. Prasad, Secretary-General of the AP Ferro Alloys Producers’ Association, said.

The State Government has imposed an FSA of Rs 1.32 per unit, in addition to FSA arrears of the last two years, which is being added to the current tariff of Rs 3.65 per unit.

“We feel the FSA charges are irrational and not only based on increase in fuel charges. The Government is also charging on their additional fixed costs and pre-paid expenses,” he said.

The ferro alloy and steel makers feel that the FSA should not be more than 30 paise per unit given the trend in fuel prices.

amitmitra@thehindu.co.in

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