VIJAYAWADA: Chief Minister YS Jagan Mohan Reddy on Friday urged Union Minister for Steel and Petroleum Dharmendra Pradhan to reconsider the decision to privatise Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant (VSP), and suggested alternatives to make it viable. Jagan, who met Pradhan on the second day of his visit to New Delhi, also requested him to set up a Petrochemical Complex in Kakinada SEZ as promised in the AP Reorganisation Act.
The Chief Minister explained to the Union Minister what the VSP means for people of Andhra Pradesh. He said the steel plant was set up following the sacrifices of 32 people and it was the realisation of a long-cherished dream of the State. Pointing out that the VSP provides direct employment to 20,000 people and indirect employment to several thousands, he underlined the need for protecting their interests. The VSP earned profits between 2002 and 2015 and it has 19,700 acres of land valued at Rs 1 lakh crore now, he said.
The VSP went for expansion by taking loans, but due to slump in global market in 2014-15, it fell into debts with the rise in operational costs and lack of captive iron ore mines. In fact, the VSP had achieved the highest ever capacity utilisation of 6.3 MTPA against the installed capacity of 7.3 MTPA and started making a monthly profit of close to Rs 200 crore from December, 2020 and continuing this performance for a further two years will improve its financial status, he said.
Explaining the reasons for the financial burden on the VSP, he said the RINL is now purchasing iron ore from NMDC Bailadila mines at a market price of Rs 5,260 per MT. Many of its competitors have captive mines for over 60 per cent 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 has resulted in cost implications of more than Rs 3,472 crore for the steel plant, he said and requested Pradhan to allot captive mines in Odisha to the VSP.
Suggesting restructuring of the VSP finances, he said the plant has a debt of Rs 22,000 crore, which is being serviced at interest rates as high as 14 per cent. Conversion of the bank loans into equity and listing the entity on the stock exchange, would remove the interest burden totally, which would also benefit the banks, he explained.
Seeking setting up of a Petrochemical Complex in Kakinada SEZ, he said DPRs for it were prepared by HPCL and GAIL with an outlay of Rs 32,900 for 1 million tonnes capacity. As the Centre had asked for Rs 975 crore per annum under Viability Gap Funding for 15 years, the Chief Minister urged it to reduce the VGF since the State could not bear such a burden in the present circumstances. As the Centre has reduced the corporate tax by 25 per cent and the decline in overall rate of interest across the world, the project can be made viable without any VGF now, he asserted.
Pradhan assured Jagan that a petrochemical complex will definitely be set up in AP and also responded positively with regard to VGF. He informed Jagan that a meeting will be convened next week with the Chief Secretary and officials of the Petroleum Department to finalise modalities.
Later, the Chief Minister met Union Railway and Civil Supplies Minister Piyush Goyal and appealed to him to release pending arrears of Rs 3,229 crore to the AP Civil Supplies Corporation. He said the free rice distribution will be continued for another two months due to Covid-19. Under the National Food Security Act, nearly 1.29 crore ration card holders in State were provided 1,85,640 MT of rice per month till December, 2015.
After December, 2015, considering 2011 census, the distribution has been limited to only 60.96 per cent of households in rural areas and 41.14 per cent in urban areas, and now only 0.91 crore ration card holders are receiving ration and the allocation is reduced to 1,54,148 MT. He said this was a serious injustice to AP as other states like Karnataka, Maharashtra and Gujarat are receiving more ration supplies.
He pointed out that the allocation of ration rice was decided before the State bifurcation. Mentioning the Supreme Court verdict that the State government is responsible in identifying those eligible for ration cards, he said the government had surveyed and identified 1.47 crore eligible families.
Further, he said the poor are suffering due to ‘unreasonable restrictions’ under the National Food Security Act and the financial burden is being borne by the State government.
Petro complex in Kakinada SEZ sought
CM Jagan Mohan Reddy sought allocation of captive iron ore mines to Visakhapatnam Steel Plant (VSP) to overcome the cost disadvantage
He urged the Centre to set up a Petrochemical Complex in Kakinada SEZ as promised in the AP Reorganisation Act, 2014
He felt that the petro complex can be set up now without Viability Gap Funding of Rs 975 crore per annum
He appealed to Union Civil Supplies Minister Piyush Goyal to release pending arrears of Rs 3,229 crore to AP Civil Supplies Corporation