Steel Industry Can't Pay Power Bills: FAPCCI

The Federation Of Andhra Pradesh Chambers Of Commerce And Industry (FAPCCI) on Wednesday stated that the Fuel Surcharge Adjustment (FSA) has pushed the steel industry in the state onto the sick bed.

Addressing a press conference at Federation House, FAPCCI president Devendra Surana said that reserves and resources of steel and ferro-alloy industries have been eroded due to the 40-60% 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% 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 since the steel industry is power intensive it constitutes about 40% 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 break-even level, where revenues are equal to expenses. Thus, they do not have any surpluses to meet the additional billing of the FSA component, and that too, large amounts varying from Rs. 35 lakh to Rs. 1.5 - 2 crores," he said.

"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 that with an investment of Rs. 10,000 crore, the steel industry directly employs about one lakh people. "It also supports downstream industries, which have investments worth Rs. 100,000 crore and employees of about 10 lakh people. The steel industry contributes about Rs. 1,000 crore towards the payment of electricity charges, Rs. 1,500 crore towards excise duty and Rs. 500 crore towards VAT per annum."

"If 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, there will be an adverse impact on the economy of the state and employment," the FAPCCI president said.

FAPCCI secretary general M V Rajeshwara Rao and other officials were also present. (INN)