As power cuts loom, Punjab steel units shift base to Uttaranchal, HP

Written by Charanjit Ahuja | Chandigarh | Updated: Jun 27 2009, 01:38am hrs
Its a double whammy for the steel units in the steel capital of Punjab. First it was the fall in demand for steel from the automobile and the real estate industry and now the Punjab State Electricity Board has imposed a complete power cut on re-rolling, arc and induction furnace units mostly located in Mandi Gobindgarh, the steel hub of Punjab.

Punjabs Mandi Gobindgarh was once considered Asias leading steel town; now a number of units have shifted their manufacturing base to neighbouring Himachal Pradesh and Uttaranchal to avail of the special concessions and subsidies to new units.

Vinod Vashisht, president, Mandi Gobindgarh Steel Re-rolling Mills Association, told FE that in last few months more than 100 scrap units had closed down due to fall in demand. Steel prices have fallen drastically and because a majority of the secondary steel producers here bought the raw material, iron scrap, at high rates and the cost of making ingots or rolled products was also high, industrial units had no option but close down business as no one would like to sell at the prevailing low prices.

Puneet Nanda, a young entrepreneur, told FE that steel furnaces and other steel rolling mills that produce TMT, angles and structures had to slash production by more than 50% or close down for the units to survive. Both Nanda and Vashisht feel while the re-rolling units are still trying to run the units, the complete power cut on re-rolling and induction furnace units could ruin the industry.

KD Chaudhary, member (distribution), Punjab State Electricity Board, said the step had to be taken as monsoon has been delayed and paddy crop was facing drought-like conditions.

He, however, said that when monsoon arrives, the Punjab State Electricity Board might review its decision.

The total availability of power in Punjab from all sources stand at 6,841 mw while the demand was a whopping over 9,000 mw.

Little doubt that the Punjab government had to take some unconventional decisions to ensure eight hours of uninterrupted power supply to the farm sector to support paddy sowing which is dependent on deep tubewells with the monsoon nowhere is sight.

The gravity of the power pangs could be understood from the fact that the office of Punjab chief minister, Parkash Singh Badal, issued written instructions on June 24 banning the use of air conditioners in government offices for the next one week.

The directions come in the wake of grim news that all dams in the state are reporting alarmingly low levels of water, affecting power generation and irigation operations.

The orders will also be applicable to offices of various boards and corporations of the state government, a spokesperson clarified.