If SAIL gets the EoI by RINL, huge amounts spent on logistics and iron ore fines utilisation could be saved, says VSP.
In the past, BRS Working President KTR has opposed the Centre's privatisation of the Vizag steel plant. (Supplied)
The BRS government’s protest against the privatisation of Rashtriya Ispat Nigam Ltd (RINL) and its move to “secure” the entity have generated much heat in Andhra Pradesh.
RINL, referred to as Visakhapatnam Steel Plant (VSP), on 27 March invited Expressions of Interest (EoI) from private companies and steel manufacturers to provide working capital, and raw materials, and to purchase its products.
The deadline for submitting EoIs is 3 pm on Saturday, 15 April. The RINL has been facing a shortage of working capital to keep the plant running.
The ruling YSRCP in Andhra Pradesh said that the Opposition parties in the state were misleading the public by saying the BRS government in Telangana would bid for securing the steel plant.
“The Opposition parties have been misleading the public as if the Telangana government was placing bids to secure the steel plant. It’s nothing but a vicious campaign,” YSRCP general secretary and advisor to government Sajjala Ramakrishna Reddy said.
Telangana minister KT Rama Rao. (Supplied)
“The YSRCP has already opposed the privatisation of Visakhapatnam Steel Plant and Chief Minister YS Jagan Mohan Reddy had suggested some practical and constructive measures to revive the steel plant so that it need not be privatised,” he added.
The Telangana government-controlled Singareni Collieries Company Limited (SCCL) has been looking at the feasibility of participating in the EoI.
In an open letter to the Central government on 2 April, BRS Working President and Telangana’s IT and Industries KT Rama Rao urged it not to privatise the steel plant in Visakhapatnam. RINL employees lauded the minister’s appeal.
Chief Minister Jagan Mohan, too, had written to Prime Minister Narendra Modi opposing the disinvestment move. He suggested a few alternatives to make the steel plant viable.
YS Jagan Mohan Reddy, Chief Minister of Andhra Pradesh (Facebook)
The government also passed a unanimous resolution against the disinvestment and sent it to the Centre.
To make RINL turn around financially, Jagan suggested that short-term and long-term loans could be converted into equities, easing the repayment pressure and the burden of paying interest.
The plant has a debt of ₹22,000 crore with an interest rate of 14 percent.
“Conversion of these loans into equity by banks to remove the interest burden totally and listing RINL on the stock exchange, giving the banks an exit option through the stock exchange route and the general public, may also be explored,” Jagan said in the letter.
Meanwhile, a five-member delegation from SCCL, comprising three directors and two general managers, reached RINL to study the feasibility of participating in the EoI.
The Visakhapatnam Steel Plant. (Official website)
The SCCL directors on Tuesday and Wednesday held talks with the top officials of RINL.
“The RINL is looking to partner with companies having interests in steel and steel-making raw materials and invites business proposals for supply of steel from RINL,” the entity said while inviting EoI.
“Potential partners may participate by way of supplying one or more key raw materials like coking coal /blast furnace coke, and iron ore and in turn take steel products as per mutually agreed terms and conditions or funding working capital and in turn take steel products as per mutually agreed terms and conditions,” the RINL said.
It is learnt that the RINL is looking at the infusion of working capital in the range of ₹3,500 crore to ₹5,000 crore through the EoI.
“The Andhra Pradesh government can also participate in the EoI issued by RINL. What is stopping the Andhra Pradesh government from participating in the EoI on the lines of the Telangana government,” VSP Employees’ Union vice president KM Srinivas asked while talking to South First.
The VSP is the only shore-based integrated steel plant in the country with two major ports in a vicinity of 25 km.
The plant expanded its capacity from three million tonnes to 7.3 million tonnes as per the National Steel Policy and is the largest single public sector unit in the steel sector.
However, RINL could not achieve its stated capacity due to the financial crisis. Its lack of captive iron and coal mines spiralled the production cost to ₹6,000 to ₹7,000 per tonne, higher than any other steel plant in India.
Now VSP executives want SAIL to participate in the EoI. They opined that it would be a win-win for both SAIL and RINL.
“SAIL has excessive iron ore in its mines. RINL is purchasing iron ore from NMDC at market price. This purchase made RINL bear ₹4,000 to ₹5,000 extra for one tonne of crude steel production,” Steel Executives’ Association (SEA) general secretary KVD Prasad said.
“RINL is associated with the adjacent Gangavaram port for getting imported coking coal delivered through conveyors. SAIL is also ferrying coking coal from Gangavaram port by rail which costs around ₹1,000 per tonne,” he pointed out.
“SAIL doesn’t have a production unit in South India. In the recent past, SAIL received several orders for structural and intermediate products. All these can be produced in RINL and exported through the two nearby major ports,” he added.
SEA recently wrote to Visakhapatnam MP MVV Satyanarayana, asking him to urge the Centre to direct SAIL to participate in the EoI. Satyanarayana in turn forwarded the SEA’s plea to the Union Steel Minister and the ministry’s secretary.
“RINL is producing world-class long products and we guarantee the quality on a par with SAIL. If SAIL gets the EoI by RINL, huge amounts spent on logistics and iron ore fines utilisation could be saved,” SEA president, Katam SS Chandra Rao said in the letter to the MP.
“RINL also will benefit as its production cost will come down significantly by maximum utilisation of equipment and well-trained manpower. Having a conversion contract with other steel manufacturing units is an existing practice as per market and logistic requirements by even market leaders. By this, SAIL can convert its unused iron ore fines into quality steel products with good techno-economic factors with a little bit of investment,” he added.
Interestingly, VSP was originally with SAIL before it was brought under RINL, which reported a turnover of ₹23,000 crore in FY 2022-23.
Meanwhile, ministers of the two Telugu states were engaged in an exchange of heated words in an unusually bitter face-off between the sibling states over a range of issues — from development to the welfare of the people.
The sniping between Telangana Finance Minister T Harish Rao and Andhra Pradesh Civil Supplies Minister Karumuri Venkata Nageswara Rao came against the backdrop of the younger sibling offering to “protect” the VSP from privatisation — an offer that has caused discomfiture in the ruling YSRCP in Andhra.
It all started when Harish Rao, on Tuesday, 11 April, while addressing workers after announcing that a building for construction workers would come up on two acres in Sangareddy district at a cost of ₹2 crore, said that Telangana offer was for all workers, even if they were from Andhra Pradesh.
“All those who have spilled their sweat for the development of Telangana, are Telangana’s sons of soil,” he said.
He then went on to add: “What is there in Andhra Pradesh, anyway? In Telangana, the government is working for your welfare. You are seeing for yourselves how the two governments are functioning. Enroll yourselves as voters in Telangana.”
Furious with Harish Rao’s comments, Nageswara Rao hit back at Telangana’s finance minister, saying that on any day Andhra Pradesh was better than Telangana.
Accusing Harish Rao of trying to belittle the welfare schemes in Andhra Pradesh, he asked the Telangana finance minister to visit the state and see for himself what the government was doing for various sections of people, and the development that has taken place.
Not to be outdone, Harish Rao reacted on Wednesday, saying that there was a whale of a difference between Andhra Pradesh and Telangana — and this time bringing the VSP into his diatribe.
In a strongly worded statement, he said: “The YSRCP and TDP together had stalled progress in Andhra Pradesh. You cannot raise your voice against the Centre even if it does not bestow special category status. You remain as mute spectators even as the Centre prepares to put the Visakhapatnam Steel Plant for sale. You are not bothered even if the VSP is being sold as scrap metal.”
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