BRS opposes privatisation of Vizag Steel, KTR lays out plan to revive it

HYDERABAD: Bharat Rashtra Samithi (BRS) working president K.T. Rama Rao on Sunday reiterated the party's support to Vizag Steel Plant workers and stated that the BRS would oppose the Central Government's move to privatise the steel plant.

In an open letter to the Union Government, KTR explained the Modi government's “evil plans” to sell off the VSP to private players, the reasons for the steel plant's losses, and ways in which the plant could be revived.

The Minister said that as part of the conspiracy to privatize the steel plant, VSP would be pushed into losses and the crisis would be shown as an excuse to hand it over to crony corporate companies. KTR said that the Union Government did not allow the special iron ore mines to the steel plant. Due to this, he said, the steel plant was forced to spend up to 60 percent of its production cost on procurement of raw material.

On the other hand, the cost of raw materials in private companies production was less than 40 percent as iron ore, coal and other mines were allotted to them.

BRS Working President said that VSP, which was forced to spend huge amounts on raw materials, was facing challenges as it was competing with private corporate companies in the market in terms of production. It was facing losses as the enterprise has to sell at the same price as them in the market.

Minister KTR said that the enterprise was in distress as coking coal had to be imported, and iron raw materials needed for steel production were being bought at market rate from NMDC.

“Due to this, more than 50 percent of production had to be stopped for a year. All of this is part of a conspiracy to push the Vizag Steel Plant into losses and use it as an excuse to privatize the steel plant. Prime Minister Modi has written off loans worth Rs. 12.5 lakh crores for his corporate friends. Why is he not showing the same generosity on the Vizag Steel Plant?" KTR asked.

Stating that an Expression of Interest (EoI) notification was issued in the garb of mobilizing funds for working capital and raw materials, KTR said that the Modi government was indirectly attempting to transfer the PSU to private entities through the notification. The minister demanded that the center should immediately cancel the EoI notification.

How to revive the plant

KTR in his letter laid out a detailed plan to revive the PSU. He said that Steel Authority of India Limited (SAIL) had already announced its expansion plans with a cost of around Rs 1 lakh crore. He said that the company could be merged with the Vizag Steel Plant, which had several advantages when compared to selling the steel plant to private companies at a low price. “This will contribute towards SAIL’s expansion goals. If the company moves in this direction, then an ecosystem can be created to fulfill a long standing demand of a steel factory in Bayyaram, Telangana and a steel plant in Kadapa,” said KTR

Stating that VSP was not able to operate at its full capacity of 7.3 MTPA as the Union Government was not providing raw materials and capital, BRS Working President said that the enterprise which was working at 50 percent of the capacity was incurring the same production cost it incurred for working at 100 percent capacity. He said that if the center extended support, the enterprise could work at full capacity which will help it in generating profits. The minister said that VSP could compete with private companies if the Union Government provided loans to it on a par with private companies and facilitated provision of capital through banks.

Maintaining that the Centre should stop conspiring to privatise a PSU which had assets worth Rs.1.5 lakh crore, KTR demanded that the Modi government extend Rs. 5,000 crore financial assistance to the steel plant. KTR reminded that earlier when the Vizag Steel Plant faced a financial crisis, Prime Ministers PV Narasimha Rao and Atal Bihari Vajpayee bailed out the PSU by extending financial support. He also suggested the Union Government purchase steel from VSP for the large-scale infrastructure projects in the country and pay the money in advance.

"The Vizag Steel Plant is allowed for loan monetization up to Rs. 25,000 crores only. However, private companies having the same amount of assets as that of the Vizag Steel Plant are allowed to raise loans up to Rs. 70,000 crores-Rs 80,000 crores," the minister added.

The BRS Working president also directed the BRS AP unit president Thota Chandrasekhar to extend solidarity to the workers of the steel plant. "Vizag steel is the right of Telugu people and the responsibility is on us to save the steel plant," KTR remarked.