Officials familiar with the matter have reported that the Central public sector giant Rashtriya Ispat Nigam Limited (RINL), commonly known as Visakhapatnam Steel Plant (VSP), is considering the lease of approximately 1,400 acres of land to another public sector giant, the National Mineral Development Corporation (NMDC). This move is aimed at generating the necessary working capital to sustain the operation of the plant as VSP grapples with a severe financial crisis.

Out of the total land holdings of 19,730 acres situated in Gajuwaka, Visakhapatnam, the steel plant occupies 11,000 acres. An additional 500 acres have been allocated for creating a residential township for the steel plant's workforce, while another 500 acres are designated for reservoirs used to store water for the plant.

“The rest of the land is kept for future expansion of the plant from its present capacity of 7.3 million tonnes, besides maintenance of greenery and open space required, as per the environmental norms,” Visakhapatnam Steel Plant Workers’ Union general secretary D Adinarayana said.

According to reports, the NMDC has proposed to lease 1,400 acres of land situated between the steel plant and Gangavaram port from the available land. This land will be utilized for the establishment of its pellets plant and stockyard. Adinarayana indicated that this matter was discussed during the visit of Union steel secretary Nagendra Nath Sinha to the steel plant on August 21, and discussions have progressed to an advanced stage.

While further details from the RINL management representative could not be obtained, a senior employee at the steel plant, who is familiar with the developments, stated that the NMDC has offered ₹1,500 crore as an upfront payment for the land, in addition to an annual lease amount of ₹70 crore for a 33-year lease period.

“This will help the RINL to partly meet its working capital requirements immediately. Secondly, the pellets produced by the NMDC would also be used as raw material for the steel plant. At present, we are importing this iron ore raw material from Kirandul and Bacheli in Chhattisgarh and if the plant is established within the backyard of the RINL, it would bring down the transportation cost,” the official said.

While most trade union leaders don't oppose leasing land to NMDC, some fear it's a step toward privatizing the Visakhapatnam Steel Plant, which workers have resisted for nearly three years. In January 2021, the Cabinet Committee on Economic Affairs (CCEA) approved 100% strategic disinvestment and privatization of RINL, part of the government's plan to raise ₹1.75 lakh crore by disinvesting in loss-making PSUs, per Tuhin Kanta Pandey, secretary of DIPAM (Department of Investment and Public Asset Management).

Progress in privatization has been slow, despite ongoing efforts and periodic demonstrations by trade unions and political groups. Union steel secretary Nagendra Nath Sinha reiterated that privatization was a Central government policy decision. Currently, RINL operates below its production capacity, with only two out of three blast furnaces in operation, producing 3.4 million tonnes compared to the plant's capacity of 7.3 million tonnes.

RINL has a ₹24,000 crore outstanding loan and believes a two-year interest payment moratorium from the Central government could help clear it.

In 2022-23, RINL reported a ₹3,049 crore net loss, aiming for ₹155 crore in 2023-24. In 2021-22, it made a ₹913 crore profit after a ₹1,000 crore loss in the previous year. The 2022-23 turnover was ₹24,050 crore (15% drop), targeting ₹31,264 crore in 2023-24 per Union Ministry of Steel figures.

Image source: HT