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Home News Power Sector News Raipur based steel plant cuts production and sells captive power

Raipur based steel plant cuts production and sells captive power

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Godawari Power and Ispat Ltd has decided to cut production to 20% and sell the power from their captive plant Which is profitable ? Making production or selling captive power? Godawari Power and Ispat Ltd,  the Raipur-based integrated steel plant, has decided to cut production to 20% and sell the power from their captive plant  to capitalise the increase in energy prices and reduction of price of steel billets. The company will also slash its ferroalloy production this year. Dinesh Gandhi, director (finance), said, “In the present market situation, the average recovery from the sale of power is much higher than the use of power in the captive manufacturing of steel billets where realisations are lower.” From September beginning to October end, the company sold close to 23 mw of power per day from its 42-mw captive power plant in Chhattisgarh. The power was sold in the open market at a realisation of Rs 8 during non-peak hours and Rs 2.50 during peak hours when the power was supplied to the state grid.

“Therefore, on an average, we earned Rs 6.50 per unit of power through sale compared with Rs 3 per unit earned through billet production,” said Gandhi. Godawari Power has a total installed capacity of 4,00,000 tonne of steel billets per annum, of which it will manufacture close to 80,000 tonne this year.

“We are also looking at cutting down on our ferroalloy production to sell the power in the open market,” said Gandhi, adding that the total installed capacity for ferroalloy is 16,500 tonne per year.

There is no major input cost involved in running the 42-mw power plant as 31 mw of it uses flue gas to generate power and the rest of it is based on thermal coal, which Godawari Power sources from Coal India Ltd. The flue gas is generated from its sponge iron plant.

Godawari Power also has plans to set up a 1,000-mw mega power plant in Chhattisgarh. “It is at a preliminary stage and we are still identifying the land required for the project,” Gandhi said. During a recent analyst conference call, Gandhi had said, “We are waiting for the announcement of certain coal blocks, which is likely in December or January. We will apply for an allotment for the power plant and if we get it, we will take the plans further.”

Courtsey- DNA Money
 

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