Cold rolled grain oriented (CRGO) steel is a critical input in the transformer industry. However, CRGO has had a very difficult time in the Indian transformer industry—for a variety of reasons.
India, for over 50 years, has been trying to produce CRGO steel domestically. However, it has yet to come anywhere close to even trial production. The entire demand, which is estimated at some 3.5 lakh tonnes per year and growing, is met through imports.
In the 1980s, India was confronted with a difficult balance of payment situation. As a consequence, the country had to adopt several austerity measures. From being an importer of prime grade CRGO, India was coerced to import scrap (used) CRGO, thereby saving as much as 50 per cent in its CRGO import bill. India then began redesigning transformers, factoring scrap, or rather non-prime, CRGO. This marked the advent of scrap CRGO in India. From what was a step in saving foreign exchange, the use of scrap CRGO then became a willful exercise and despite several steps to ensure that prime grade CRGO is used, the menace of scrap CRGO still haunts in the Indian transformer industry.
Production of CRGO is a technically complex activity, involving some 19 intricate manufacturing processes. Globally, there are only around 15 steel mills that produce CRGO, and supply it worldwide.
The quality of CRGO (whether prime grade or otherwise) influences the performance of a transformer. CRGO steel is cut into laminations that eventually form the “core” of the transformer. The better the CRGO, the lower are the technical losses of the transformer. Usage of scrap (inferior) CRGO can be very lucrative to the manufacturer, as the overall production cost could drop by as much as 40-50 per cent. The use of scrap CRGO is mostly seen in low-voltage distribution transformers, rather than high-voltage power transformers. India has a plethora of manufacturers of distribution transformers, and an alarmingly high proportion of them allegedly use scrap CRGO.
With a view to curbing the use of scrap CRGO, the government over the past few years has passed several “quality control orders” that make it mandatory for the use of prime grade CRGO. In fact, the government even made it mandatory for all foreign steel mills to get certification from BIS (Bureau of Indian Standards) for CRGO steel.
It is very heartening to note that all the 15-odd steel mills globally have secured the mandatory BIS registration and are now supplying only BIS-marked CRGO to India. This has resulted in a significant drop in the use of scrap CRGO. However, there are still instances where scrap CRGO finds its way in distribution transformers.
Earlier, there were sporadic episodes where scrap, and not prime-grade, CRGO was used. This happened inadvertently as there was no way to know if the CRGO was of substandard grade. Now with the BIS certification, this issue has been resolved to a very large extent. However, what persists is the willful usage of scrap CRGO in spite of the stringent regulatory framework.
It is alleged that transformer manufacturers, in connivance with customs authorities, still import scrap CRGO and this substandard material finds its way in distribution transformers. There are other modes of operation as well. Transformer scrap is imported as “steel scrap for recycling” and scrap CRGO from these transformers is recycled and deployed in production of transformers.
It is interesting to note that transformers are subject to checking by Bureau of Energy Efficiency (BEE). However, given the volume of transformers produced, it would be very difficult for any agency to certify each and every transformer produced. Scrap CRGO thus passes the muster.
Even today, as some industry players point out, some manufacturers sell transformers for much lower than the standard price, thanks to the use of scrap CRGO. For instance, a 500KVA transformer that should typically cost Rs.8-9 lakh, is sold for as low as Rs.5 lakh by some manufacturers.
There are also cases where prime grade CRGO is “blended” with substandard CRGO. Such contamination is difficult to detect. For instance, 75 per cent of the material used would be of prime grade and the rest inferior. When transformers are pressed in operation, they do not operate at full load immediately. In fact, power utilities order transformers keeping in mind the future load on the grid. Thus, transformers always have excess capacity in the early years of their service. The adverse impact of substandard CRGO is therefore not felt immediately as it the equipment does not run on full load, in the early part of its service. It is usually after a few years that the transformer starts “misbehaving” due to inferior CRGO, and invariably by then, it is well past the performance guarantee period of the transformer.
India is also witnessing imports of inferior laminations. The government has been apprised of this phenomenon but there is as yet no ban on imports of laminations. These laminations come from neighbouring countries, typically Sri Lanka and Bangladesh. These used laminations are then re-cut and fitted into transformers.
There is also a move to produce transformer cores from amorphous core material. Companies like Hitachi Metals are producing amorphous material (AM) that is seen as an alternative to CRGO. However, the usage of AM has yet to gain pace in India.
Experts feel that power distribution utilities have very ineffective procurement policies. For one, procurement is governed by price (the L1 mechanism); there is no provision for quality. This being the case, inferior transformers get unwittingly purchased and deployed. In the case of private distribution utilities, which are very few as of now, procurement is much more scientific.
Experts feel that if BIS quality norms are to be adhered to strictly, it would be very difficult for transformer manufacturers to even consider using substandard CRGO. For instance, in 11kV distribution transformers, there are three energy-efficiency levels stipulated by BIS. As one transformer manufacturer expressed, it would be difficult to attain the moderate Level 2 efficiency even if one uses better-than-prime grade CRGO!
Matters are coming to such a pass that conscientious manufacturers are exiting the low-rating distribution transformer business as they simply cannot compete with substandard equipment, on the basis of price. The willful usage of substandard CRGO continues plaguing the distribution transformer industry. Unscrupulous manufacturers are proving that where there is a will, there is a way!