Industries, Industrial bodies of Odisha terms recent steep hike of electricity duty as counter productive to invest Odisha: Dr.T.K Chand CMD, NALCO

Bhubaneswar: Prominent industries of Odisha including NALCO, JSPL, Vedanta, HINDALCO, PPL, MCL, JSL, IMFA, Nava Bharat, Tata Steel, Tata Iron & Sponge, FACOR, MAITHAN and others as well as representatives of industries associations like CII, UCCI, Captive Power Plant Federation, FICCI, Aluminium Association of India and others had a consultative meeting under the chairmanship of Dr. Tapan Kumar Chand, CMD, NALCO and Chairman CII on the issue of recent steep hike of 83% in electricity duty for CPP. In the meeting, confederation of power producers, Aluminium Association of India and others made a presentation on damaging implications of steep hike on industries of Odisha as well as the investment climate in the state. The steep hike of electricity duty from Rs.0.30/kwh to Rs.0.55/kwh will make the cost of production in the state increase by Rs.4,000/- per tonne in case of aluminium metal to Rs.400 per tonne in case of steel and will make the industries in Odisha un-competitive severely eroding the competitiveness of products produced in Odisha as compared to that of the other neighbouring states and overseas. Such steep hike in a time when domestic as well as international market is going through sluggish cycle has been decried by all industry representatives. They have termed the hike as inappropriate and uncalled for and have requested industry bodies to take up with state govt. to roll back the steep hike. It may be mentioned here that Captive Power Plant Federation has already moved to the Court and has obtained an interim order to keep the differential increased amount in a separate account till the disposal of the case. Industry bodies feel that state govt should rethink and revisit the issue due to the following :

1. All neighbouring states with whom the products of the state of Odisha compete in domestic market are having electricity duty within the range of 0% in Andhra Pradesh & Telangana to 32% in Chhattisgarh.

2. GST rollouts are scheduled on 1st of July, 2017 and GST being destination based tax with consumption as the criteria for receipt of revenue, Odisha need to develop as a consumption hub and a market hub to avail the benefits under GST and this can be possible only with industry making end use products in Odisha in a given cost competitive climate. The MSME sector which is in the priority list of government will also be hit hard.
3. Domestic and international market being in a down turn cycle, this is not the appropriate time for such steep hike, as it becomes the proverbial last straw on camel’s back.

4. The Odisha investment sentiment given a fillip during the Odisha Investors’ Summit don’t fit into such steep hikes in duties, increasing the duty burden, almost killing the industries.

5. Govt. should not push the industries to the corner where industries will have no other option but to seek court intervention to get relief. This will be a wrong signal sent to the prospective investors as existing investors will have a different story to tell.

6. In the current market scenario, many CPPs are not running in full capacity, roughly 30 to 40% and are struggling to survive. The thinning margin will be completely wiped out by such increase and the investments are likely to become NPA.

7. The current step is being perceived by the industry as a gross deviation from the earlier industrial policy framework of the govt to promote CGPs, more so when there was 50% hike already been made one and half year back.

8. The above increase in the cost of power input will have negative impact on export, employment generation, revenue earning, leading to migration of downstream industries to the neighbouring stages.

9. Given the strong rationale for a reasonable duty regime, industries and industry bodies have expressed their strong reservation on recent hike and have requested state govt to rollback the duty increase. The industry bodies will again meet to discuss the future course of action.