Chandrapur’s ferroalloy plant in loss, blames power co

04 December 2017

Despite surge in the steel market, Chandrapur Ferroalloy Plant (CFP) is still reeling under the steep losses thanks to alleged apathy of Maharashtra State Electricity Distribution Company Ltd (MSEDCL) towards providing the promised incentive against the power consumption. CFP has incurred losses of around Rs10 crore in last five months, sources have informed.

CFP, a unit of Steel Authority of India Ltd (SAIL), requires 46MW of power per day for production. The plant is purchasing its entire power from MSEDCL since July 1, hoping to earn high incentive promised by MSEDCL for high-end power consuming industries.

Sources explained that normally it costs around Rs7 per unit of industrial power consumption, but new MSEDCL GR promises of providing incentive up to 1.92 unit to the industries in Vidarbha and Marathwada. Lured by the high incentive, CFP has closed down its 4.2MW captive power plant and has also stopped purchasing power of 20MW from SAILs Bhilai based captive power plan.

Earlier, while CFP was drawing half of its power from its own sources, the production cost was at Rs17,000 per ton. Now that plant takes all its power from MSEDCL, the production cost has gone up to Rs27,000 per ton. Rs10,000 per ton loss incurred is due to non payment of incentives, an inside source claimed.

CLAP had suffered loss of Rs55 crores between April and September in 2016-17. Thanks to surge in steel market, it made up much of its losses and the net loss was only Rs15 crore in the same period in 2017-18. Out of this, Rs10 crore loss is on account of denied incentive.

“Had power supply company promptly awarded promised incentive, CFP could have recovered of its all losses and for first time in last many years could have shown profits,” the source said. The collective losses is expected to go beyond Rs20 crore by end of fiscal year if situation remains the same.

Executive director SK Saha ratified of not gaining any benefit promised by MSEDCL. CFP is all set to commission its new furnace no. 3, which will further increase production. The power consumption too will simultaneously rise from 46MW to 56MW per day. If MSEDCL provides promised incentive, we hope to start showing profits soon, he told TOI.

Sources claimed that CFP management is contemplating on restarting its captive power plant and resuming power purchase from Bhilai in light of MSEDCL apathy. It CFP goes by this alternative, MSEDCL will lose around Rs7.50 crore. Many other large scale industries in Chandrapur are reportedly facing similar crises. Superintending engineer, MSEDCL, Chandrapur circle, Harish Gajbe claimed that if there is any delay in allocation of incentive, it is not intentional. “If CFP fulfils the criterion and is eligible for incentive, then they will definitely get it. It could be procedural delay may be due to submission of various documents and related certificates, he speculated assuring to look into the matter,” he said.

Source: TOI