Amid heightened protests against the privatisation of the Visakhapatnam Steel Plant, Andhra Pradesh Chief Minister YS Jagan Mohan Reddy wrote to Prime Minister Narendra Modi, urging him to reconsider the Union government’s plans of disinvestment. Noting that the steel plant is the largest public-sector industrial unit in the state creating employment for several thousands of people, Jagan said that the plant could become a profitable venture with support from the Union government, with measures like “allotting captive iron ore mines to bring down the input costs, swapping high-cost debt with low-cost debt, and converting debt into equity through equity conversion.”
The Visakha Steel Plant of the Rashtriya Ispat Nigam Limited (RINL) was established in 1977 after a prolonged public agitation in its favour in the former undivided state of Andhra Pradesh.
With the Cabinet Committee on Economic Affairs (CCEA) giving in-principle approval for 100% strategic disinvestment of Government of India’s shareholding in RINL, Visakhapatnam, and reports the Union Cabinet had cleared the privatisation move, has become a cause of concern for the people of Andhra Pradesh, Jagan noted.
On Saturday, former Minister and Telugu Desam Party (TDP) MLA from Visakhapatnam North Ganta Srinivasa Rao resigned in protest against the privatisation move, a day after seeking Jagan’s intervention in the issue.
In his letter to the PM, Jagan said that the plant had had a good performance between 2002 to 2015. He said that the company land of around 19,700 acres alone would have a valuation of over one lakh crore rupees, as it is located in an urban area. With the plant recently taking up plant modernisation and capacity expansion works, it had to borrow from banks, to take up the expansion to increase production capacity, he said.
“Owing to the unfavourable steel cycle globally, the company was making losses since 2014-15 and was finding it difficult to service the debt. One of the major structural issues that also leads to a high cost of production is the absence of captive mine thereby affecting the profitability,” Jagan stated.
Jagan said the state government is ready to work with the Ministry of Steel to “protect the jewel of Andhra Pradesh.”