Andhra Pradesh units get power just thrice a week

For thousands of industrial units in Andhra Pradesh, electricity is available only thrice a week, a situation that threatens to scythe their profits, sales and margins.

“Add to that the 4-hour power cuts during peak periods. Effectively, industry is getting power only for 40% of its requirements. So 60% of productive capacity is being lost,” said V S Raju, president of the Federation of Andhra Pradesh Chambers of Commerce and Industry.

While major units have taken to captive, diesel-based generation, the small fry may have to soon down shutters.

There are various reasons for this predicament. The supply of coal, the primary source of power generation in the state, remains choked because of the ongoing Telangana agitation.

The situation has become so critical, the state has announced a 2-day power holiday for industrial units. Taking into account the mandatory day off for workers, supply is functional for just about three days every week.

“The situation is really bad. More than the big units, it is the medium and small industries that are suffering badly. If the situation continues for another 10-15 days, we will see many shutting down and their loans becoming non-performing assets (NPAs) for banks,” said Y Harish Chandra Prasad, former president of CII-Andhra Pradesh and chairman of the Malaxmi Group.

Apart from their inability to execute orders, there is a big cost disadvantage that weighs on small and medium enterprises, he said. 

The bigger units are sweating it out, too, but are a little better off. These are relying on back-up facilities and by cutting down production during the 2-day power holiday.

“Many of us are already affected by the rising interest costs and the quarter results are clearly showing an erosion of bottomline due to high finance costs. Any back-up is already designed to be a stop-gap arrangement, but they cannot function like full-fledged power generation units. We have approached the government, but are yet to see any tangible result,” said a CEO of a major industrial unit, who did not wish to be named.

The smaller players are visibly worried. “Our plight is like farmers in times of irregular power supply, excess rains or drought. Already, we have started defaulting on our loans. If this continues, we will also consider the option of suicide like farmers,” said an owner of a small industry unit on the outskirts of Hyderabad, who said he be not identified.

There are about 10,000 small and medium units located in and around Hyderabad that are into component manufacturing, engineering products, chemicals and the like.
Power utilities currently face a demand of 272 million units a day while supply is 20% less at 231 million units.

The IT and ITeS sector, which is touted as the showpiece of the state, is among those that have been worst hit. “We have already deferred our expansion in Hyderabad and are looking to expand in Bangalore. Many of the IT and ITeS units face this problem,” said head of operations of a multinational consultant. He requested he be not named since he’s not authorised to speak to the media.