Darkness on the shop floor
HARYANA
Waiting for New Units
Raghav Lekhi, a young entrepreneur whose company M and M Machine Crafts in Gurgaon makes auto parts, had big plans to expand his business this year and hoped to push his turnover to Rs 140 crore from Rs 110 crore last year. But even before the end of the first quarter of the year, his dreams seem to be coming crashing down. A crippling power shortage has hit production on the one hand and raised costs on the other as salaries have to be paid and expenditure incurred on maintenance, among others.
“We are already down by Rs 2 crore in the last month at both our units put together,” Lekhi said. “We suffer heavy losses as the machines stop working when the power goes off and have to wait for the gensets to start. The machine also has to warm up again. Besides, we have to deal with regular wear and tear due to sudden stoppages.” While Gurgaon officials say that the power cut in the city is for 5-6 hours per day, Lekhi says his unit has not been getting supply for more than 12 hours a day.
Lekhi’s problem is symptomatic of the power crisis plaguing industrial centres across the country. Haryana, for instance, faces a demand of 1,800 lakh units of power per day for all its consumers while supply is only 1,300 lakh units. Industrial demand is 250 lakh units a day while supply is 200 lakh units. While industries in Gurgaon need about 50 lakh units per day, supply is between 30 and 35 lakh units. Officials blame the shortage on power not being available in the grid.
Power to industries in Haryana is supplied by the Dakshin Haryana Bijli Vitaran Nigam (DHBVN) which in turn gets it from the Haryana Power Generation Corporation (HVPN). The cost of power through generators, on the other hand, is double the price of state power. The state supplies power at Rs 6 per unit whereas power from other sources costs Rs 10 to 12.
Industries Minister Randeep Singh Surjewala admits that there is a severe power shortage in the state but is confident of ovecoming it soon. The shortage, he said, is due to inadequate supply of coal and technical snags.
Power Minister Captain Ajay Singh Yadav said some of the scarcity would be bridged when the two units at Jhajjar are synchronised. But industry officials say the state does not seem to have learnt from its mistakes. “Work that could be done in 30 days takes 40 days and leads to problems. This is a perpetual annual problem and needs urgent solutions from the government,” said Dalip Sharma, regional director of industry body PHDCCI.
— Mukesh Bhardwaj
UTTAR PRADESH
Powerless See-Saw
Last week, even as the Uttar Pradesh government made headlines by ordering malls in the state to close by 7 pm to reduce power consumption, only to reverse it under pressure a day later, another similar order passed on the same day was lost in the melee of the news cycle. The other order that day from the Power Corporation Limited (UPPCL), snapped power supply to all iron rolling mills having furnaces until further orders. But entrepreneurs lobbied and met the corporation’s chairman Avnish Awasthi and after much deliberation, that order too was withdrawn the next day.
Industrialists, however, say that they were not really surprised by the government’s decisions in a state never really known for being too industry-friendly.
In the previous week, UPPCL had begun power cuts during the day for industries in addition to the cuts from 10 pm to 6 am. “It became very difficult for us to manage. Things are now on track this week and there is no day power cut. But they have introduced emergency rostering which has no timing,” said Prashant Bhatia, chairman of the Lucknow unit of the Indian Industries Corporation (IIA).
India’s largest state needs anywhere between 12,000 MW and 13,000 MW of power per day if it has to ensure unrestricted supply. With power cuts imposed under “restricted conditions”, the demand is between 10,000 and 11,000 MW. But average power availability from all sources is about 10,400 MW.
The cuts have obviously hurt the profitability and viability of industries. Vinamra Aggrawal, joint MD of Technical Associates and a member of the CII’s state council, said brass manufacturing units in Moradabad prefer DG sets and do not have power connections. “With frequent power cuts, low voltage and no fixed time of availability, it is better to go for DG sets. Production costs rise but there is no other way out,” said Aggrawal.
But IIA’s Bhatia said that diesel generators are not viable for big factories as production costs soar and cannot deal with competition from other states.
Kanpur, another industrial hub in the state, faces power cuts of up to eight hours a day. “We are not running to our full capacity. We have backup arrangements but smaller units are failing to meet their production targets, resulting in mounting costs,” said Ambarish Srivastava, plant in-charge, Red Tape Shoes.
The situation is particularly difficult for smaller units which supply bigger factories. “Due to power cuts, we are not able to deliver on time. It affects our future business,” said Rehan Hussain, who owns an insole manufacturing unit in Shuklaganj, Unnao. Besides power cuts, there is also the problem of power tripping. “It is a very dangerous sign. The iron rolling mills are worst hit. They have to maintain a temperature at the melting point of iron. A power tripping results in halting production and when resumed it affects the quality of the product,” said Bhatia.
Noida, the industrial hub in the national capital region, faces power cuts for at least 6 hours a day. “This has resulted in a two-fold problem. One, industries need to use power backups like generators which add to their production costs. Also, because the power supply keeps fluctuating, the production process gets delayed. The result is that our production efficiency has gone down by more than 20 percent during the summer months,” said Vipin Malhan, president of the Noida Entrepreneurs Association.
The fallout of the power crisis is not just on production targets or revenues and profits but has also resulted in deteriorating work conditions for labourers such as Shyam Lal, who works in a company which deals in construction material in Noida’s special industrial economic zone. “The generators are used only for the industrial parts of the plant, which make sure the machines continue to operate. We have to make do without fans and lights. In this heat, working conditions become almost unbearable. But there is not much that can be done. We still have to earn for our families. And the company officials tell us that they have to cut costs to keep the business functioning. the situation is definitely worse than last year,” said Lal.
But UPPCL chairman Awasthi is defensive and blames the crisis on the extreme heat that pushed up demand and erratic coal supplies that hit production. “If we had adequate coal supply, another 500 MW power would have been produced. Now slowly things are getting normal,” said Awasthi. Also, he does not agree that UP’s industrial sector is suffering due to the power crisis. “We are not doing so badly. Lucknow is the only state capital in the country which has exemption from power cut. Also, check in some industrial towns, Faridabad has a 12-hour power cut,” he said.
— Faisal Fareed & Dipankar Ghose
PUNJAB
Math Gone Wrong
Haryana’s neighbour Punjab had arranged to meet its summer power needs by factoring in a 10 percent growth in demand based on the average growth over the last three years. But the Punjab State Power Corporation Limited says demand shot up by another 8 to 10 per cent, forcing compulsory offs on industry. While the state’s main steel and furnace industry has to shut down for two days a week, other industries have to close for a day.
“As on June 20, Punjab’s peak unrestricted power demand, when no power cuts are imposed, was 9,500 MW and when restricted, 8,700 MW. The energy consumption was 2,119 lakh units and 1,935 lakh units respectively. So the shortage is nearly 185 lakh units a day,” said Arun Verma, director, distribution, Punjab State Power Corporation Limited.
And that is bad news for industry. Ludhiana-based Badish Jindal, president of the Federation of Small Industries Association of Punjab (FOPSIA), says even using generators in such a situation is not viable. “It costs us Rs 14-15 a unit while the power tariff is between Rs 5.30-6 a unit. Our production has suffered by more than 35 per cent while we are incurring the same cost on labour, which is idle for the time there is no power but has to be paid for 8 hours,” Jindal said.
In Ludhiana, nearly 60 per cent of industries are located in mixed land use areas and not in designated industrial areas where compulsory weekly offs are being imposed. Industries here complain that although they do not face compulsory offs, power supply is erratic. “In mixed land use areas, the power corporation is imposing unscheduled cuts at its will. The industrial production in the state is hit by this uncertainty every year in these months. No new industry will come to Punjab under such a power scenario, even the existing ones will move out,” said Gurmeet Singh Kular, president of the United Cycles Parts and Manufacturers Association (UCPMA).
— Rakhi Jagga
HIMACHAL PRADESH
Himalayan Trouble
Surplus power has been the USP of this Himalayan state, a rare exception when shortages are the norm in most other states. But the summer of 2012 has ended that luxury.
The power availability from hydro-power stations, and also the state’s share in surplus power from private and central sector projects crashed abruptly earlier this month because of low discharge in the rivers·caused by freak weather and the slow melting of glaciers feeding these rivers. As a result, Himachal Pradesh State Electricity Board (HPSEB) imposed power cuts in the industrial belt of Baddi-Barotiwala-Nalagarh and Kala Amb, reducing their sanctioned supply by almost by 60 percent.
The shortage during this time was 70 lakh units, but as supply improved, the power cuts were withdrawn.
Those withdrawals, however, were only official, industrialists said. “It’s a farce. Industrial centers are facing unscheduled power cuts of two to three hours daily besides tripping and poor quality power. The production is down by 15 to 20 per cent. For some industries, even a single second’s disruption results in production losses and costs them heavily. Some have switched over to working at night. Others have installed diesel generators,” said C N Dhar, chairman, HP council of the Confederation of Indian Industry.
Government officials, however, say the situation is not as alarming as in some other states. They say the situation has been caused by a combination of an industrial influx and freak weather. They said Himachal Pradesh attracted industrial investment of Rs 13,500 crore after it announced a slew of incentives in 2003 and the spurt was affecting power demand.
“Some systemic or distribution snags are only exceptions, that too only for two or three minutes,” said Tilak Raj, a deputy director in the industry department. “The government has invested a lot to improve the distribution network as there were serious problems earlier mainly due to the sudden influx of industries. Things are much better now as power is Himachal Pradesh’s prime incentive to industry.”
— Ashwani Sharma
(Tomorrow: The crisis in Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra and Orissa)