VISAKHAPATNAM: The Andhra Pradesh Government has decided to convert pending power dues of Rs 2,400 crore into equity for the Visakhapatnam Steel Plant (VSP), a move aimed at stabilizing the public sector unit’s financial position and supporting its revival plan.
State Telugu Desam Party (TDP) President and Gajuwaka MLA Palla Srinivasa Rao said the decision reflects the government’s commitment to strengthening key industries and ensuring the long-term sustainability of the steel plant.
“Converting dues into equity gives the plant fiscal stability and allows for operational flexibility. It is a step that secures both the institution and the livelihoods connected to it,” he stated. Palla noted that the initiative forms part of a broader revival strategy being implemented in coordination with the Centre.
“Of the Rs 11,500-crore financial package earlier announced for the plant, Rs 9,500 crore has already been released to Rashtriya Ispat Nigam Limited (RINL). This decision consolidates the financial foundation of the plant and signals the government’s clear intention to support its recovery,” he added.
Addressing concerns raised by certain trade unions, Palla dismissed claims that the plant could not function without captive iron ore mines. He clarified that ores with less than 40% iron content were commercially unviable and that the plant could reach breakeven with a production capacity of 60% - around 15,000 metric tonnes per day. “With the third blast furnace operational, production has begun to improve steadily,” he asserted.
Palla stated that workers have shown renewed commitment to restoring productivity, while alleging that some groups were attempting to spread misinformation.
Past admin lapses resulted in job loss: Palla
“Those responsible for past irregularities are now misleading employees with false claims,” Palla alleged.
He was critical of the previous government led by YS Jagan Mohan Reddy, stating that poor industrial policies and delayed payments had pushed the plant into debt exceeding Rs 38,500 crore. “The past administration’s inaction resulted in job loss, reduced investment, and stagnation in the steel sector,” he claimed.
Focusing on employment concerns, Palla emphasised that workers displaced by the plant’s establishment should continue to receive priority in recruitment. “At least half of all employment opportunities under the new single-window contracting system should be reserved for local displaced workers and long-serving contract staff,” he stated.
He said the government supported the new contracting model as part of the restructuring process but expected contractors to retain existing employees. “The number of contractors has been reduced from nearly 1,000 to 42, one for each division, to streamline operations and reduce misuse of funds,” he explained.
