Power tariff revisions worry Pasakha industries
June 15 | Kuensel
By Rajesh Rai, Phuentsholing
With the three-year power tariff cycle ending this month, industries in Pasakha industrial estate in Phuentsholing have started to worry.
The revision with increased proposals would do more harm than good to the already weak market, industrialists fear.
The Druk Green Power Corporation (DGPC) and Bhutan Power Corporation (BPC) have already proposed the revision for the next three years to Bhutan Electricity Authority (BEA) in March this year.
BEA is currently reviewing the proposals from the two companies.
As per the BPC’s proposal, energy price for high voltage (HV) companies has not changed from the existing Nu 1.59 per unit (kWh). However, it is the demand charge, which BPC has increased from Nu 262 per kilovolt ampere (kVA) per month to Nu 290 per kVa per month that industries believe would affect the industries.
An industrialist said the ferrosilicon market is at its lowest today.
“India has a requirement of 10,000 metric tonnes (MT) per month and Bhutan produces 12,500MT,” he said, adding that India also has its own producers.
“This means there is already a situation of oversupply.”
Industrialists also claim that they are already selling below the production cost. If the power tariff goes up, they say it will be “the final blow” to the HV (ferrosilicon) industries.
Price of an MT of ferrosilicon is Nu 68,000 a month, which the industrialists say is a decrease from Nu 100,000 to Nu 110,000 in 2018. The online ferrosilicon price chart of the Indian market also shows the ex-Bhutan current ferrosilicon price is INR 69,000 per MT. At the same time last year, the price was INR 97,000 per MT, a decrease from Nu 110,000 in January 2018.
The industrialist said the price would further dip because of this oversupply.
Today, an 18 mega-volt ampere (MVA) ferrosilicon industry pays a monthly demand charge of Nu 5 million (M). Should the revision proposal of demand charge come through, industrialists say they would incur an additional cost of Nu 500,000, which would again add to the cost of production.
There are companies with 18-42MVA in Pasakha.
DGPC’s proposed energy rate has also left the industrialists worried. DGPC has submitted a tariff revision proposal to increase the current energy sale price to BPC from Nu 1.59 per kWh to Nu 1.70 per kWh.
Should BEA approve this price, BPC would pass down the new tariff rate to the consumers, which according to the industrialists would eventually snatch industries’ only competitive edge of power.
Although, DGPC has proposed to increase the energy purchase price of Nu 1.59 per kWh to Nu. 1.70 per kWh, Association of Bhutanese Industries and Bhutan Chamber for Commerce Industries, through a joint tariff report has recommended that an energy purchase price of Nu 1.37 per kWh be considered. The demand charge should be Nu 268 per kVA, the joint report stated.
Meanwhile, ferrosilicon price has also dropped in the European market, industrialists say. The price today is about USD 1,050, a drop from USD 1,700 in 2018. Germany, UK, and Italy are the three major markets for most Bhutanese manufacturers.
Ferrosilicon was the top exported commodity in Bhutan in 2018. Bhutan exported ferrosilicon worth Nu 13.05 billion (B). Industrialists have pointed from the beginning of introduction of tariff cycle that government should consider the revenue they paid in taxes.