Is the Steel Ministry trying to pressurise Vizag Steel to allow entry of private companies into its operations to pave the way for privatisation?

vizag steel

Shri Nagendra Nath Sinha

Union Steel Secretary

Dear Shri Sinha,

Earlier, in my letter dated 29-8-2023 addressed to you , I expressed my concern at the Visakhapatnam Steel Plant (VSP) being pressurised by the Steel Ministry into alienating its valuable land illegally to the Adani Group. Now, I find yet another instance of your Ministry becoming a party to VSP’s Board entering into an MOU with the Jindal Group to run its third blast furnace, a move that corroborates my fear that your Ministry is trying every means to offer the steel plant with its valuable lands and highly skilful personnel on a silver platter to one of these private companies for a song, instead of consolidating the CPSE’s finances and reviving it.

With the enormous technical expertise and capability available among the steel CPSEs, if your Ministry had made an earnest effort, it could have revived the blast furnace, contributed to a reduction in the unit cost of production of steel by allotting a captive iron ore mine and providing liquidity support to the plant as a medium-term measure of relief. Apparently, there are external pressures on your Ministry to weaken the steel plant on many fronts, reduce its perceived value and give it away to a chosen private party.

In the past, in my letters to the Prime Minister, I pointed out that the vast stretch of land available with the Steel plant was acquired from reluctant farmers under the erstwhile land acquisition law in the name of “public purpose” defined in the law as for an undertaking wholly owned by the government. To hand over any part of the steel plant to a private party would therefore constitute a brazen illegality. 
The Steel Ministry cannot contend, as it did in the past, that the decision to hand over the blast furnace to a private party is a managerial decision and it had nothing to do with it. This is a facile argument as two senior officers of your Ministry are a part of VSP’s Board of Directors.

It is unfortunate that the your Ministyry and the Ministry of Finance should wash your hands off on providing a debt-restructuring facility and liquidity support to VSP, whereas the Centre has had no hesitation whatsoever in extending mind boggling subsidies of the order of Rs 2 lakh crores over 5 years to profiteering private companies under a highly questionable Production Linked Incentive (PLI) scheme. It is equally ironic that the Central Ministries should have no hesitation whatsoever in handing over valuable mineral blocks including iron ore blocks to private companies and forcing PSU banks to fund them, whereas the same Ministries are reluctant to allot one captive iron ore mine to VSP. This is perhaps a scam of a huge magnitude that CAG should audit. I am marking a copy of this letter to the CAG.
Let me caution you that the people of north Andhra, the employees of VSP and families of all those who lost lands to the steel plant have a heavy stake in the future of the plant and every surreptitious move of its management and that of your Ministry will remain under public gaze and scrutiny. I therefore demand that your Ministry should 

  1. allot a captive iron ore mine to VSP to improve its finances
  2. extend debt-restructuring facility and liquidity support to allow VSP to revive itself
  3. desist from alienating even a square inch of its land to private agencies
  4. desist from involving any private company in running any component of the plant
  5. announce that VSP will not be privatised at all

I hope that your Ministry, in consultation ewith the Ministry of Finance and others concerned, proceeds as above, as otherwise there will be widespread public dissatisfactyion in this part of Andhra Pradesh.

yours sincerely,

E A S Sarmna

Former Secretary to the Government of India


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