“The Ministry of Steel has clarified that there is no freeze on the disinvestment process of RINL,” it said in a statement.
The Visakhapatnam Steel Plant. (Official website)
A day after Union Minister of State for Steel Faggan Singh Kulaste’s statement created confusion, it emerged on Friday, 14 April, that the disinvestment process of the Visakhapatnam Steel Plant (VSP) — also known as Rashtriya Ispat Nigam Ltd — was on track.
Kulaste, who was in Visakhapatnam on Thursday, said the Central government would focus on strengthening VSP for the moment rather than privatising it.
His statement led to widespread speculations that the Central government had either slowed down or backtracked on privatising RINL in the face of strong opposition from several quarters.
However, the Union Ministry of Steel made it amply clear on Friday that the RINL disinvestment was on track.
“The Ministry of Steel has clarified that there is no freeze on the disinvestment process of RINL,” it said in an official statement.
Clarifying some reports regarding the hold on the disinvestment process of RINL, the ministry said that the disinvestment process was in progress and efforts were being made by the company and supported by the Central government to improve the performance of RINL and keep it as a functioning concern.
Kulaste on Thursday refused to say that the Centre had rolled back its decision to privatise the steel plant.
Later, in a meeting with workers’ unions of RINL, the MoS also said that only the Union Cabinet could take a decision on stopping the privatisation and that it was out of his purview.
It is not the first time that the Centre reaffirmed its decision to privatise RINL.
Due to several reasons, especially the second wave of the Covid-19 pandemic, the privatisation of RINL was forgotten by everyone.
With the kind of stiff opposition from all the political parties and elected representatives ever since the issue gained traction in February 2021, everyone expected the Centre to rethink the move.
However, the Department of Investment and Public Asset Management (DIPAM) issuing the RFP to hire a legal firm and transaction advisors around August 2021 only reinforced the fact that it is going ahead with the disinvestment proposal.
The then Union steel minister Rama Chandra Prasad Singh in December 2021 told the Rajya Sabha that the ministry had received several representations on the disinvestment of RINL.
“Various representations have been received at the ministry regarding the decision on disinvestment of RINL. The decision on the disinvestment of RINL is not under reconsideration. Strategic disinvestment of the Central government’s equity will lead to the infusion of capital for optimum utilisation, expansion of capacity, infusion of technology, and better management practices with resultant higher production and productivity and expansion of direct and indirect employment opportunities,” Singh had told the Rajya Sabha.
It was on 27 January, 2021, that the Cabinet Committee of Economic Affairs (CCEA) gave in-principle approval for 100 percent strategic disinvestment of the Central government’s shareholding in RINL along with management control by way of privatisation.
Demanding that the Centre roll back its call, thousands of VSP employees have been protesting since then.
On his part, Andhra Pradesh Chief Minister YS Jagan Mohan Reddy has already written to Prime Minister Narendra Modi opposing the disinvestment move, and also suggested a few alternatives to run the plant.
The state government also passed a unanimous resolution against the disinvestment in the Assembly and sent it to the Centre.
VSP is the only shore-based integrated steel plant in the country, with two major ports within 25 km of it.
The plant expanded its capacity from 3 million tonnes to 7.3 million tonnes as per the National Steel Policy, and is the single-largest public sector unit (PSU) in the steel industry.
However, VSP could not achieve its stated capacity due to a financial crisis.
Its lack of captive iron and coal mines spiralled the production cost to ₹6,000-7,000 per tonne, higher than any other steel plant in India.
The state-run plant recently invited an Expression of Interest (EoI) from private companies and steel manufacturers to provide working capital, and raw materials, and to purchase its products.
It is learnt that the RINL is looking at the infusion of working capital in the range of ₹3,500-5,000 crore through the EoI.
Currently, only two of the three blast furnaces at VSP are in operation. The third one was shut down in January 2022 due to a lack of coking coal and working capital.
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