India’s first shore-based vizag steel plant set up in 1971, “a testimony to the will of Telugu people.”

Visakhapatnam steel plant directly employs 18,000 permanent employees, 22,000 contract employees and indirectly employs millions, is being privatized.

Hundreds of employees of Visakhapatnam Steel Plant took out a protest rally against the proposed divestment, demanding the Centre to withdraw its proposal and save the steel plant as it is one of the biggest and profitable public sector undertakings in the state.

It is the duty of the Centre to explain why it is planning to sell it, instead of trying alternative measures to help its survival. The livelihood of 25 per cent of population of Vizag depends on the direct and indirect employment generated by Vizag Steel.

First, the government has to explain why it has not allotted captive iron ore mines to Vizag Steel Plant. What has compelled the government, which allocated captive mines to private steel plants, not to provide one for its own plant?

Mines are national wealth, which means the past, present and future generations own it.

Disinvestment means withdrawing from some shares of a public enterprise and allowing others to purchase them. In some cases, the government retains 51 per cent share, thus retaining the management of the companies. In other cases, it reduces its shareholding to 49 per cent, giving up its control in favor of select companies. Nothing of this sort is being done in the case of Vizag Steel Plant. The government plans to sell it completely, and calls it ‘disinvestment’, which is not the case.

The Centre did not give a rupee to Vizag plant after the initial investment of ₹4,900 crore in the 1970s. The plant had increased its steel production from 3.4 million tonnes to 7.3 million tonnes with its own funds and with bank loans, reflecting its financial strength. The RINL has paid back ₹43,000 crore to both the Centre
and Andhra Pradesh as various taxes and dividends so far. One main reason for the losses is that the VSP has had to bear the interest burden of loans it took for increasing production. Another reason was that it had to purchase thousands of tonnes of iron ore every day for a higher cost as the Centre did not allocate mines to its own unit.

The Visakhapatnam steel plant has an installed capacity of 21 million tonnes per year, but has been operating with a production capacity of only 7.3 million tonnes. The basic reason for this underperformance is the lack of raw material. Unlike Steel Authority of India Limited (SAIL), Tata Steel, Jindal Steel and other such plants, the VSP does not have its captive iron ore mine. It has been depending on supplies from Bailadila mines being run by the National Mineral Development Corporation and importing coking coal from Austria.

The other steel plants have their own captive mines allocated by the government and they are able to get iron ore at a cost of ₹1,500 per ton, whereas RINL has been compelled to spend ₹7,000 per ton. As the VSP’s per day requirement is 20,000 tonnes, it has had to spend ₹11 crore (₹5,500 x 20,000) per day, incurring huge losses.

The steel plant has a highly valuable asset in the form of 22,000 acres of land. At the present market value, each acre costs around ₹5 crore. So, the land value itself is more than ₹1 lakh crore and the machinery could be valued at another ₹1 lakh crore. Can the honesty, transparency and accountability be proven by fixing the price at ₹2 lakh crore or more for anyone willing to buy it? How does it value the sacrifice of 32
people who had laid down their lives for this plant? How would the government reward Kurupam zamindars who donated 6,000 acres for this plant?

Save, Survive, Develop and help Economy of Vizag, Andhra Pradesh and the Nation as a whole..