Steel & ferro-alloy industry seeks Bengal CM's help over power tariff hike

Business Standard

30-05-2025

Trade associations representing the steel and ferro-alloy sector in West Bengal have appealed to Chief Minister Mamata Banerjee for urgent intervention against what they describe as an unsustainable rise in electricity tariffs by the Damodar Valley Corporation (DVC). They fear the increased power costs could force many units to shut down.
In a joint statement, the Damodar Valley Power Consumers Association, the Steel Re-Rolling Mills Association of India, and the West Bengal Sponge Iron Manufacturers Association raised concerns over the revised power rates approved by the West Bengal Electricity Regulatory Commission (WBERC) for DVC consumers.
According to them, the base tariff has been fixed at Rs 4.64 per unit for the financial year 2025–26. On top of this, an additional Rs 1.36 per unit is being charged to recover arrears from 2014 to 2020, taking the effective rate to Rs 6 per unit.
Further, they alleged that additional charges imposed through the Energy Charge Rate (ECR) and Monthly Variable Cost Adjustment (MVCA) amount to another 50 paise per unit.
'The net chargeable tariff to industries will now be around Rs 6.80 per unit, a 30 per cent increase, which is unaffordable and threatens the survival of our units,' the industry bodies stated in their appeal.
They added, 'We are not against paying dues, but request that the Rs 1.36 per unit past arrears be recovered over the next six years to avoid tariff shocks.'
Claims of disparity and demand for audit
The associations also highlighted what they described as a disparity in tariffs between West Bengal and Jharkhand. They claimed DVC charges consumers in Jharkhand only Rs 4.42 per unit and demanded a forensic audit of the ECR and MVCA components.
DVC, however, responded that the average cost of power in Jharkhand is Rs 5.61 per unit.
The trade bodies stressed the importance of West Bengal in India's steel ecosystem. 'West Bengal is the second-largest contributor to India's secondary steel production, ferro alloys, pig iron, and pellets, and third in sponge iron output. Collapse of this sector will endanger the livelihoods of lakhs of people,' they warned.
DVC rejects allegations
DVC refuted the allegations, calling them 'factually inaccurate and selectively presented.' It clarified that electricity tariffs are not set by DVC itself, but by the relevant state regulators—WBERC for West Bengal and JSERC for Jharkhand.
The utility explained that tariffs in West Bengal had remained mostly unchanged since 2018–19 due to legal action initiated by the same associations. The Supreme Court dismissed these cases as without merit in 2018, and only recently resolved the matter, instructing that arrears be paid within two months.
'We have complied fully with regulatory and court directions and shown great patience through years of litigation,' DVC said. It noted that it continued supplying power throughout the period, despite rising input costs.
DVC also defended the current rates as 'cost-reflective and justified' and said that the WBERC had approved the revised structure. It reiterated that it cannot risk financial instability after a long period of absorbing losses.
The utility added that it has proposed the creation of a common regulator to ensure uniform tariffs across states.
Industry urges CM's immediate action
Calling the situation a crisis, the associations urged Chief Minister Mamata Banerjee to step in and facilitate talks between WBERC and DVC.