Central government trying to deliberately weaken Visakhapatnam Steel Plant, alleges FDNA

Even as the plant’s capacity has been expanded from 3.2 MTPA to 7.3 MTPA, it is being grossly underutilised with the unit producing at one-third of its capacity, points out Aja Sarma

The Forum for Development of North Andhra (FDNA) has accused the Central government of deliberately trying to weaken the Rashtriya Ispat Nigam Limited (RINL), the corporate entity of the Visakhapatnam Steel Plant (VSP), and handover its assets to private parties for a pittance.

“The matter is serious and it needs urgent attention. Even as the capacity of the plant has been expanded from 3.2 million tonne per annum (MTPA) to 7.3 MTPA with huge investment, it is being grossly underutilised, with the unit producing at one-third of its capacity,” FDNA general secretary A. Aja Sarma told the media on Tuesday.

Only one of three furnaces is operating at its full capacity, while another at partial capacity and the third has been shut down for a year, he alleged and said that steel production in India was nearly one-tenth of that in China, while both countries have about the same population, indicating the huge gap in demand and supply.

The SAIL, which has crude steel production capacity of 20.63 MTPA has plans to increase it to 35 MTPA by 2030-31. The proposed scale of indicative investment by SAIL to reach the capacity of around 35 MTPA of crude steel would be around ₹1,10,000 crore. Mr. Sarma wondered as to what was the justification of such an investment when 7 MTPA capacity stands underutilised at the VSP and Naganar Steel plant owned by the NMDC in Chhattisgarh.

The underutilisation of RINL-VSP is a very serious matter as the plant is shore-based, and the equipment would be subject to severe corrosion due to the saline atmosphere if they are kept idle, pointed out Mr. Sarma.

He said the posts of the Director, Personnel and Finance were vacant and that of Director (Operations) would shortly fall vacant. Fifteen Executive Directors' posts have been vacant for the last one year.

He said that two serious problems that were left unaddressed were: lack of working capital and high cost of iron ore. The problem of working capital arose due to heavy debt burden that has plagued the unit since its inception. Some of the loans need to be written off, as was being done for private sector firms, he said.