After seeing many highs and lows in its three decades of existence so far, Visakhapatnam Steel Plant is once again at a crossroads with the Centre proposing a 100 per cent ‘strategic sale’. But workers and people of Visakhapatnam district and few across the State are trying to save the biggest Central Public Sector unit in the state from being privatized.
Since commencing production in 1991 with two blast furnaces – Godavari and Krishna – the VSP piled up losses of over Rs 4,000 crore till 2000, due to high interest rates on loans and high cost of raw material. In 2000, the plant was referred to the BIFR (Board for Industrial and Financial Reconstruction).
Immediately after restructuring, the VSP bounced back making profits from 2002 to 2008. It made a bumper profit of about Rs 2,800 crore in 2004-2005 financial year. The expansion project increasing production from 3.2 million tonnes to 6.3 million tonnes was sanctioned. However, due to sluggish market, VSP ended up in losses in 2009 and 2010 and the first proposal for 10 per cent disinvestment was mooted but workers and unions protests put paid to any such plans.
Amidst its capacity expansion to 7.3 million tonnes, Rashtriya Ispat Nigam Limited (RINL) has signed an MoU with South Korean steel major POSCO in October 2019 for setting up a greenfield steel plant at an estimated cost of Rs 30,000 crore on the steel plant premises. As per the MoU, POSCO wishes to have at least 50 per cent shareholding while that of RINL is still to be worked out. This has become a bone of contention between the employees, trade union and the management.
Amidst all these, the Union government has listed RINL-VSP for strategic sale. Many say that allotting captive mines and restructuring loans can save the plant from being privatised, as the sale proposal is based on the fact that it is a ‘loss-making’ PSU. Some are also recommending its merger with NMDC or SAIL.