Don’t miss the latest developments in business and finance.

4% power duty cut for soda units

Image
Shashikant Trivedi New Delhi/ Bhopal
Last Updated : Jun 14 2013 | 5:07 PM IST
Considering the long-pending demand of the Rs 84 crore caustic soda (chlor alkali) industry in Madhya Pradesh, the state government has slashed the electricity duty for them from 8% to 4%.
 
The state has two caustic soda units in Madhya Pradesh""one is owned by the Aditya Birla Group and the other is in Amlai Shahdol, known as Jute Mill.
 
The decision may spur more investment in the state in technology upgrade since the units in Madhya Pradesh produce caustic soda through mercury cell technology, which will be banned after 2012.
 
At present the caustic soda units pay 23.40 paisa per unit as electricity duty and 20 paisa per unit cess (now reduced to 10 paisa per unit), which makes the state units in competitive in India.
 
Power is main raw material for these units with a combined capacity of 2,43,140 metric ton, which constitutes 66% of the total costs to the companies, a research findings of The Energy and Research Institute (TERI) has revealed.
 
At present the total direct variable cost without duty and cess stands at Rs 11357 per metric tonne and with duty and cess it stands at Rs 19037 per tonne.
 
"The cost of production has gone up by 2652 per tonne since 2001 thus the electricity duty and cess component in this increase is Rs 1349 per tonne," said an industry source adding, "except for Maharashtra and West Bengal where cess and duty is not more than 15 paisa and 5 paisa per Kwh (kilo watt hour) while the same is 43.40 paisa per kwh in Madhya Pradesh for caustic soda units."
 
Further the key raw material salt is imported from Gujarat and demand is very thin in the state. Thereby the transportation cost escalates prices by another 2500 per metric tonne, said an industry source.
 
"The government has recently decided to reduced the electricity duty from 8% to 4%, provided the input should be 50% or more of the total cost of production," a top government official told Business Standard.
 
A government insider informed Business Standard that energy and finance department had refused the demand of the units.

 
 

Also Read

First Published: May 26 2006 | 12:00 AM IST

Next Story