Barely a week after the Tamil Nadu Chief Minister pointed out in a meeting here that the power cut has been `completely removed’ since June 1 in the state, the announcement by TANGEDCO of a 20 per cent power cut during non peak hours has come as a shocker to the industries in the region.

What has come as a twin blow to the industries are the proposal by the TNERC to increase power tariff and the non-peak hour power cut by the Tangedco which would push up the power cost for industries as diesel prices had steadily been on the increase. Besides, not all the industries can afford to run their plant and machinery utilising captive power generation for long hours, according to industry sources in Coimbatore.

Addressing an election meeting in Coimbatore on Sept 15 in support of her party candidate for the mayoral polls, Chief Minister J Jayalalithaa pointed out that the daily power supply in Tamil Nadu during the current year had gone up to an average of 267 million units as against 208 million units during the previous DMK regime. She said that because of the positive measures taken up by the state government, the power cut introduced by the DMK Government had been `completely removed’ from June 1, 2014.

The twin blow of power cut and possible hike in power cost however has come as a shocker to the industries in the region, particularly the power-dependent sectors like foundries and textile mills.

Explaining to Business Line the impact of the decisions, D Balasundaram, President, Tamil Nadu Electricity Consumers’ Association (TECA), Coimbatore, said different class of consumers would be affected differently because of the applicable tariff structure.

He said for HT consumers, for whom the effective power cost is Rs 7.20/unit now, the increase would work out to about Rs 1.90 to Rs 2 per unit of power. For power intensive industries like textile and foundries that abound in the region, the increase would push up the cost of production by 3-4 per cent.

For instance, for the textile industry power cost constitutes 11-12 per cent of production cost. For foundries, the share of power cost in cost of production is higher at 14-15 per cent. If the proposed rate hikes are notified, the increase in power cost would work to be about 35 per cent for HT users.

Balasundaram said not for all the power intensive industries, captive power was an option because of the steep generation cost of Rs 15 per unit, despite the fact that captive power was better than grid power in terms of quality. Continuous process industries like foundries and textile mills may not opt for captive generation for different reasons like sluggishness in demand during Diwali-Pongal period or the huge cost involved.

He said the industries also found the sourcing of power from other sources not attractive as the TANGEDCO charged Rs 3.60/unit of power that made the third party power prohibitively costly. He feared that the sudden development on the power front would impact any expansion plan of the industries. It is also possible that industries might look for other regions for fresh investment as the increase in power tariff and the impact of the power cut would push up the production cost steeply.

The Chief Minister in a press release had yesterday explained the rationale for the proposed increase in power tariff including hike in coal prices, debt burden for TNEB, increased wage and pension costs etc. But she had also assured that whatever might be the TNERC’s final decision on tariff after seeking the views of all stake holders, the government would provide increased subsidy so that the poor were not affected by any tariff revision.

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