Industry Groups Sound Alarm Over Rising Power Costs

Kolkata’s steel and ferro-alloy industry has issued an urgent plea to Chief Minister Mamata Banerjee, claiming that a sharp increase in electricity tariffs by Damodar Valley Corporation is threatening the survival of hundreds of units. In a joint statement, three major trade associations, the Damodar Valley Power Consumers Association, the Steel Re-Rolling Mills Association of India, and the West Bengal Sponge Iron Manufacturers Association, warned of an imminent industrial crisis if the revised rates are not reconsidered.

They alleged that the effective tariff charged by DVC has now risen to ₹6.80 per unit, representing a 30% increase, which they argue is unaffordable for energy-intensive sectors such as secondary steel, sponge iron, pig iron, and ferro alloys. These sectors form the backbone of eastern India’s heavy industry and support employment for lakhs of workers.

The Tariff Breakdown & Industry’s Concerns

According to the industry bodies, the West Bengal Electricity Regulatory Commission has approved a base tariff of ₹4.64 per unit for 2025–26. However, an additional ₹1.36 per unit has been added to recover arrears accrued between 2014 and 2020, following a recent Supreme Court directive. Furthermore, DVC has levied extra charges through Energy Charge Rate and Monthly Variable Cost Adjustment, adding another ₹0.50 per unit.

This brings the cumulative cost to ₹6.80 per unit. “We are not against paying legitimate dues, but request that arrears be recovered over the next six years to prevent a tariff shock,” the joint statement said. The associations have urged a forensic audit of the variable components, questioning their transparency and justification.

Comparative Pricing Dispute with Jharkhand

Adding to their grievance, the trade bodies highlighted an alleged pricing disparity between West Bengal and Jharkhand, where DVC also operates. They claimed DVC supplies power to Jharkhand consumers at ₹4.42 per unit, compared to the significantly higher rate in West Bengal. The appeal questioned the rationale behind the discrepancy and called for a review of inter-state pricing norms.

However, DVC officials responded by saying that the average cost of power in Jharkhand stands at ₹5.61 per unit. They emphasised that tariffs are not arbitrarily fixed but are approved by independent state regulators, WBERC in West Bengal and JSERC in Jharkhand, based on cost structures, consumer mix, and local economic conditions.

DVC Defends Tariff Hike, Cites Legal Compliance

In a sharply worded rebuttal, DVC dismissed the allegations as “factually inaccurate and selectively presented.” The utility explained that the tariff hike is the result of long-standing litigation brought by the same trade bodies, which delayed adjustments for several years. The matter was finally settled by the Supreme Court earlier in 2025, ordering the payment of pending dues within two months.

“Despite frozen tariffs and mounting input costs, we continued uninterrupted power supply. The new tariff is cost-reflective and justified under WBERC’s orders,” DVC said. It also pointed to the idea of establishing a common electricity regulator to bring parity across states, as a long-term structural solution.

Industry Fears Job Losses & Plant Closures

The steel and ferro-alloy industry in West Bengal is a significant contributor to India’s industrial output. The state ranks second in secondary steel and ferro alloys production, third in sponge iron, and is home to a dense network of re-rolling mills and pellet plants. These units are highly dependent on reliable and affordable electricity to remain competitive.

According to the trade associations, many units are already operating on thin margins due to global steel price volatility, rising raw material costs, and stricter environmental compliance norms. The sudden tariff surge, they argue, could force shutdowns, leading to job losses and financial distress across the value chain. “This will endanger the livelihoods of lakhs of people,” they said.

Appeal for Political Intervention

With little time left before the revised tariffs are fully enforced, the industry groups have sought immediate intervention from Chief Minister Mamata Banerjee. They have urged her to engage with WBERC and DVC to explore options for staggered payment of arrears, reduction of variable charges, and parity in inter-state power pricing.

“Your timely intervention will be instrumental in resolving this issue and saving these crucial industries in the state,” the appeal stated. Industry insiders say failure to resolve the issue promptly could derail planned capacity expansions and investment in downstream steel projects.

Key Takeaways

• Trade bodies allege a 30% tariff increase by DVC, raising industrial power cost to ₹6.80 per unit and threatening the viability of West Bengal’s steel sector.

• DVC maintains the revised rates were approved by regulators, justified by cost recovery, and mandated by the Supreme Court to clear old arrears.

• Industry has urged Chief Minister Mamata Banerjee to intervene with WBERC and DVC to prevent closures, job losses, and economic disruption.