YSRCP submits memorandum to Union Steel Minister on Visakhapatnam Steel Plant

The YSR Congress Party (YSRCP) has submitted a memorandum to Union Minister of Steel and Heavy Industries H.D. Kumaraswamy urging him to reconsider the decision taken by the Union Government to privatise Visakhapatnam Steel Plant (VSP).

YSRCP MPs V. Vijaya Sai Reddy, S.V. Subba Reddy, Pilli Subhash Chandrabose, P.V. Midhun Reddy, Alla Ayodhya Rami Reddy and others, in the memorandum on Monday, stressed the need for captive mines for Visakhapatnam Steel Plant. They also wanted the Union Government to convert the short-term and long-term loans into equity so that debt serving can be brought down. They also wanted the Centre to continue the plant’s operations in order to achieve a turnaround.

RINL is purchasing iron ore from NMDC’s Bailadila mines at market price, which has put it at a cost disadvantage of around ₹5,260 per MT of steel (at ore level). Many of its competitors have captive mines for more than 60% of their requirement and buy only the rest from NMDC. Even SAIL has its own captive mines with reserves of iron ore sufficient for 200 years. This excess cost of iron ore has cost implications of more than ₹3,472 crore for RINL. It is essential to create a level-playing field for all the players and hence allotment of captive mines for RINL will help tide over this cost disadvantage, they said. 

The short and long-term loans could be converted into equity, taking off repayment pressures and interest burden. The high-cost debt which is ₹22,000 crore is being serviced at interest rates as high as 14%. Conversion of these loans into equity by the banks so as to remove the interest burden totally and listing the entity (RINL) on the stock exchange giving the banks an exit option through the stock exchange route through the general public may also be explored. These measures could ease the burden of debt servicing and improve financial sustainability, they added.