Amaravati: Andhra Pradesh chief minister Jagan Mohan Reddy on Tuesday sought the appointment of Prime Minister Narendra Modi to explain the options available to revive the Rashtriya Ispat Nigam Limited (RINL), popularly called the Vizag steel plant, rather than going ahead with the Centre’s 100 per cent disinvestment move.
“I will bring an all-party delegation including the representatives of trade unions to represent to you directly the concerns being expressed by the people of Andhra Pradesh, employees and various stakeholders,” Jagan said.
In a letter addressed to the Prime Minister, Jagan noted that the plant had a good performance between 2002 to 2015, as it was earning profits with positive net worth, creating employment opportunities for close to around 20,000 people directly and many other indirect employment opportunities in Vizag.
Jagan said that it was only when the plant took up loans for its expansion and modernization, coupled with unfavorable steel cycle globally, that the company was making losses since 2014-15 and was finding it difficult to service the debt.
“One of the major structural issue that also leads to the high cost of production is the absence of captive mine thereby affecting the profitability,” he wrote in the letter. The chief minister exuded confidence that RINL will again become a profitable venture given some support from the central government, instead of taking the disinvestment route.
He suggested “turn around measures such as allotting captive iron ore mines to bring down the input costs, swapping high-cost debt with low-cost debt, converting debt into equity through equity conversion and monetization of vacant land.”
Among the four detailed measures Jagan suggested, are continuing operations to achieve turn around; captive iron ore mines to reduce input costs; financial restructuring and monetising land to make the company cash rich.
Jagan Mohan Reddy’s letter to Modi comes a day after finance minister Nirmala Sitharaman stated in the parliament that the central government would go ahead with the plan of 100 per cent privatization of RINL.
“Strategic disinvestment of the government equity will result in higher production and productivity and expansion of direct and indirect employment opportunities,” Sitharaman told the Lok Sabha on Monday.
On 27 January, the cabinet committee on economic affairs had approved 100 per cent divestment of the government shareholding in RINL, besides RINL’s stakes in its subsidiaries and joint ventures via strategic disinvestment by way of privatization.