Amid growing outcry against the Centres move to privatise Rashtriya Ispat Nigam Limited (RINL) which has a steel plant in Visakhapatnam, Chief Minister YS Jagan Mohan Reddy has written to Prime Minister Narendra Modi to reconsider the decision.
He said the state government is ready to work with the Steel Ministry to protect the Public Sector Enterprise, which provides employment to 20,000 people directly and many others indirectly.
“The Government of Andhra Pradesh is ready to work with the Ministry of steel to protect the jewel of Andhra Pradesh. Therefore, I request you to kindly reconsider the disinvestment plans of RINL Visakhapatnam and explore other opportunities to put the plant back on track,” he said in the letter, written on Saturday.
RINL the corporate entity of Visakhapatnam Steel Plant (VSP) a Navratna Company under the Ministry of Steel, currently has a capacity of 7.3 million tonnes per annum and took up plant modernisation and capacity expansion borrowing loans from banks.
Recently the Cabinet Committee on Economic Affairs (CCEA) has given in-principle approval for 100 per cent strategic disinvestment of the Centres shareholding in RINL, along with management control by way of privatization.
The Chief Minister said the Cabinets clearance for the privatization has become a point of discussion among people of the state and a cause of concern.
Owing to the unfavourable steel cycle globally, the company was making losses since 2014-15 and was finding it difficult to service the debt, he said.
“One of the major structural issues that also leads to high cost of production is the absence of a captive mine, thereby affecting the profitability,” he said.
Mr Reddy suggested that the PSEs short-term loans, along with long-term loans, be converted into equity, taking off repayment pressures and interest burden.
He also suggested that RINL be allotted captive Iron Ore Minister in order to reduce the input cost.
Employees of the steel plant and civil society, supported by various political parties, have taken out rallies, demanding that the Centre roll back its decision.