Open Access Power System will cripple Indian spinners

21 Aug '12

2 min read

The Indian government has proposed “open access power” system for industrial consumers who consume more than 1 MW. This means that, those in the production sector with a consumption exceeding 1 MW will have to buy costly power from Independent Power Producers (IPPs).

The biggest impact of this decision will be on the textiles industry, particularly on the spinning sector, since most spinners consume more than 1 MW and will now have to purchase power at market rates, rather than at tariffs fixed by the Regulatory Commission and since unit rates charged by IPPs are quite higher compared to those by Power Boards.

“Electricity costs account for around 13-15 percent of overall costs for a spinner. This decision of the government could mean cost of electricity will shoot up and as a result cost of production, which could mean spinners losing competitiveness in local as well as overseas markets”, said a top official of Confederation of Indian Textile Industry (CITI).

“We suggest that the government stick to the current model of electricity supply and distribution and leave it to the various industrial sectors to access power from IPPs as and when they need to”, Mr DK Nair, Secretary General of CITI concluded by saying.

The root cause of the problem is the serious shortage of electricity supply in India. The two recent power outages which engulfed almost more than half the Indian population is a pointer to the fact. Tamil Nadu and Andhra Pradesh which house a major number of textile plants in India too face a chronic power shortage leading to heavy losses for the textile mills.

Fibre2fashion News Desk - India

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