Jagan asks SteelMin to rollback decision on RINL

New Delhi/Visakhapatnam Andhra Pradesh Chief Minister Y.S. Jagan Mohan Reddy on Friday asked Union Steel Minister Dharmendra Pradhan to reconsider Centre's decision to offload the Government of India's shareholding in Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant.

Reddy, who met and submitted a representation to Pradhan on the second day of his Delhi visit, said RINL is pride of Andhra Pradesh which was achieved after 'Visakha Ukku, Andhrula Hakku' agitation claiming the lives of 32 agitators in police firing at various places in undivided AP.

Reddy, also urged Pradhan, who is also Minister for Petroleum, Natural Gas, to expedite the implementation of Kakinada Petro Complex. During his hour-long discussion, he appealed to stop privatisation of the VSP and requested to consider the alternatives suggested by the State to put it back on the right track. Earlier, he wrote two letters to Prime Minister Narendra Modi and got a resolution adopted in the State Legislative Assembly.

Nearly 20,000 people are employed in VSP and thousands more have indirect employment. The Chief Minister explained that VSP performed well and made profits between 2002-2015. The plant has gone through an expansion by taking loans, but due to the slump in international market during 2014-15, the organisation fell into debts with the increasing operational costs and lack of own mines. In fact, VSP has achieved the highest ever capacity utilization of 6.3 MTPA against the installed capacity of 7.3 MTPA and started making a monthly profit of close to Rs 200 crore and continuing this performance for a further period of two years will result in improving the financial situation. The plant has 19,700 acres which is worth in crores and can be monetised to clear the crisis.

Reddy pointed out that currently, RINL is purchasing iron ore from NMDC Bailadila mines at a market price of around Rs 5,260 per MT. Many of its competitors have captive mines for over 60% of their requirement and buy only the rest from NMDC. Even SAIL has its own captive mines with reserves of iron ore sufficient for 200 years. This excess cost of iron ore has cost implications of more than Rs 3,472 crore for the plant and it is essential to have an allotment of captive mines in order to overcome the cost disadvantage. The Chief Minister requested to allot the captive mine in Odisha which will help in reviving VSP.

Besides these, the Chief Minister suggested other possibilities in restructuring the finances of VSP, where all the short term and long term loans could be converted into equity easing the burden. The plant has a debt of Rs 22,000 crore which is being serviced at interest rates as high as 14%. Conversion of these loans into equity and listing the entity on the stock exchange, would wipe out the interest burden totally, where the banks would also encash through the stock exchange. He said that the plant has supplied over 7,000 MT of oxygen during the second wave of Covid-19, saving lives of people in hard times and further assured that the State is ready to work with the relevant central departments to protect the Navratna company, which has its headquarters in Visakhapatnam.

Referring to the Kakinada Petro Complex, the Chief Minister stated that it was promised and listed in AP Reorganisation Act that a petro complex will be set up at Kakinada SEZ. He said that DPRs have been prepared for the project by HPCL-GAIL together with a capacity of one million tonne at a cost of Rs 32,900 crore. As the Centre has asked for Rs 975 crore per annum under Viability Gap Funding for 15 years, the Chief Minister requested to cut down the VGF since the State could not bear such a burden in the present circumstances.