Why do Vizag steel workers want RINL to take over Gangavaram port from the Adani Group?

The employees alleged that the port management restricted the supply of coking coal citing non-payment of dues to the tune of ₹56 crore.

BySNV Sudhir

Published Aug 08, 2023 | 3:25 PMUpdatedAug 08, 2023 | 3:25 PM

Workers' union leaders are in Delhi, demanding the Union government to hand over the port to RINL. (Supplied)

Employees of the Rashtriya Ispat Nigam Ltd (RINL) have raised a fresh demand — they want the company to take back the Gangavaram port from the Adani Group. The workers were already opposing a move by the Union government to privatise the Visakhapatnam Steel Plant (VSP),

They now want the port to be handed over to RINL, the corporate entity of VSP, to ensure the smooth flow of coking coal, integral to making steel. VSP has been the major customer of the port — which has been developed on its land.

The Gangavaram port was initially developed under the Public-Private Partnership (PPP) model. In 2021,  the Adani Group acquired all stakes, including those held by Andhra Pradesh, and gained total control over the port.

“The coking coal supply was disrupted for almost a month recently, and the plant had to be operated at low capacity. The plant’s installed capacity was 3.4 million tonnes per annum, and it was scaled up to 7.3 million tonnes per annum. In fact, VSP has the potential to produce eight million tonnes of crude steel,” Visakha Ukku Parirakshana Porata Committee (VUPPC) co-convenor J Ayodhyaramu told South First.

“However, at present the plant is operating at around half of its capacity, citing high input cost due to the lack of captive iron-ore mines. Now, due to disruptions in the supply of coking coal, the plant’s production was further scaled down, compounding its woes,” he said.

Also read: KTR tells Centre to merge Vizag Steel Plant with SAIL

Pending dues

Ayodhyaramu said the Gangavaram port management had caused the supply disruption, citing pending dues.

RINL sources said that the Gangavaram port management restricted coal supply since the plant has to clear pending handling charges of around ₹56 crore.

“It’s absurd… how can port management hold the plant operations to ransom? In the first four months of the financial year, the RINL had paid around ₹70 crore as cargo handling charges. Earlier, there were instances of dues mounting to ₹200 crore, but the supply was not disrupted,” another trade union leader told South First.

He further alleged that the move was a conspiracy to hasten the plant’s privatisation.

“The plant is already making losses due to various reasons. If it runs at lower capacity due to lack of coking coal, it will further slip into losses — which will be shown as a reason to privatise the plant,” he said.

RINL workers had also recently staged a protest at the Gangavaram port gate against the management.

Another trade union leader observed that the National Mineral Development Corporation (NMDC) had not restricted supply to RINL citing pending dues. RINL sources said the plant was now functioning at 70 percent of its capacity.

In the early 2000s, RINL had contemplated developing a captive port. However, the then-state government wanted a minor port at Gangavaram under the PPP model. RINL had to part with 1,100 acres for the port. It received monetary compensation and also land at Kotapadu, around 100 km from the plant.

In 2003, the government provided 1,800 acres valued at ₹54 crore to the project, treating it as the government’s investment towards 10.4 percent equity in the Gangavaram Port Ltd (GPL).

Related: ‘Bailadila ore ideal for Vizag, Bayyaram, but Centre helping Adani’

Representatives in Delhi

Meanwhile, representatives of VUPPC, an umbrella organisation of several trade unions spearheading the agitation against the privatisation of the steel plant, are now camping in Delhi to meet the Union steel minister and MPs of other parties to muster support for their stir.

Along with saving the steel plant from privatisation, they also want Adani Group out of the port.

RINL needs at least 16,000 tonnes of coking coal a day to run its plant at its full capacity. VSP needs 1.6 kg of iron ore and 550 grams of coal to produce 1 kg of steel.

RINL imports coking coal mainly from Australia and the US. The imported coal comes to the plant through a conveyor belt from the Gangavaram port.

“Out of the total coal requirement of around 16,000 tonnes, Gangavaram port has been supplying only 3,000 to 4,000 tonnes a day for the past few months. However, there is enough coal in the yard,” another trade union leader said.

Related: RINL privatisation on, says Centre, day after it hinted otherwise

Port management clarifies

The Gangavaram port management said that it was committed to responsibly conducting business and building trust with all stakeholders.

“As a responsible corporate entity, we have been providing cargo handling services to RINL despite delayed payments and our outstanding dues piling up over the past six months to a huge amount. Since Gangavaram port considers RINL as a key customer, we have continued our services despite them going in the direction of becoming unsustainable,” Adani ports director and spokesperson GJ Rao said in a statement.

“As RINL is a respected PSU, we request its leaders to honour their promises to clear the dues and ensure that cargo handling remains sustainable about the port operations,” the statement added.

He also said that Adani Group has no interest in the privatisation process of RINL as alleged by trade unions.

“We request the unions to refrain from gathering outside the port premises as it not only disrupts operations in the entire industrial area and the port but also causes traffic chaos that affects members of the public. We have ensured and will continue to ensure that cargo supply by the port supports our valued customer RINL,” Rao added.

The Adani Ports and Special Economic Zone Ltd (APSEZ) acquired the stake of the port’s founder DVS Raju and family, and Warburg Pincus, and proposed to buy the government’s shares worth ₹645 crore as well. The government agreed.

Gangavaram port is the second-largest non-major port in Andhra Pradesh with a 64 MMT capacity established under a concession from the Andhra Pradesh government that would extend till 2059.