Save Vizag Steel Plant

​Visakhapatnam: The state government is apparently showing step-motherly treatment towards the Visakhapatnam Steel Plant (VSP), particularly at a time when it is in the red, by encouraging private players for meeting its steel needs in the construction of new capital of Amaravati, instead of using the VSP products.

This has given rise to the slogan ‘Save Steel Plant’, which is being heard increasingly these days. It may be recalled that the VSP was born after a long struggle with the slogan ‘Visakha Ukku-Andhrula Hakku’. The Vizag Steel Plant has got special recognition as premier steel producer and has been identified as Nava Ratna. Yet it is in debts and struggling to survive.

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Highlights:

• It is high time more VSP steel is used for Amaravati to tide over crisis
• As against requirement of 10k tonnes, only 4k tonnes of steel from VSP is reportedly utilised
• VSP steel costs `30,000 per tonne whereas Chinese variety costs only `23,000

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In this scenario, the government is evincing more interest in importing steel from China as it is cheaper than that produced by the VSP. As against the requirement of 10,000 tonnes of steel for Amaravati, only 4,000 tonnes of steel from VSP is being reportedly utilised by the government.

A heavy demand of two lakh tonnes of steel is estimated to be required for the State capital and two lakh housing project of the Housing Board. As against the VSP rate of Rs 29,000-30,000 for a tonne of steel the Chinese variety is being sold for Rs 23,000. Besides, private players are selling a tonne of steel for Rs 24,000. Hence the government is showing interest to use the cheaper variety in the name of meeting the project cost.

In fact, ruling TDP MLA from Gajuwaka Palla Srinivasa Rao requested the government for allocation of captive mines for the VSP in the last Assembly session that was supported by all the parties. But nothing has been done since then. Many point out that if the company has a captive mine, the raw material costs could have come down by 70 per cent.

CPM secretary for the CRDA area Ch Babu Rao demanded that the government should include terms in the contracts for the capital development to use minimum percentage of local material such as iron in the construction of Amaravati, Polavaram, public housing, etc.

“VSP is purchasing raw material at Rs 5,000 per tonne, whereas private companies with captive mines procure the same for Rs 500. If the production cost is Rs 1,200 crore per one million tonnes a month, the raw material alone costs Rs 800 crore.”

In the absence of its own captive mines the cost of production has been going up for the VSP. This has become a curse for it as it has to spend 55 per cent of the production cost to purchase raw material. The VSP trade union leaders claim that this is forcing the plant to spend additionally Rs 1,000 crore per year.

Noticeably, even the private players own captive mines. The VSP is spending Rs 5,000 to buy raw material in the absence of captive mines whereas others spend only Rs 500.

Although the VSP produces quality steel its market share is declining because of its high cost, points out State CPI secretary J V Satyanarayana. The VSP is facing loss of Rs.1,400 crore.

The government has been blasted for extending concessions to import steel when the local industry is facing crisis. Keeping in view the crisis the steel industry is facing, there is need to extend concession to it, Congress leader Boleti Satyanarayana told The Hans India.

However, the ruling party leaders say that the government was committed to help the local industries as part of its strategy to promote industries. They point out that as part of the plan, 4,000 tonnes of steel was already purchased from the VSP.

Visakhpatnam City BJP president P V N Madhav wants the government to use more VSP steel in the construction of State capital so as to enable the public sector undertaking to tide over the crisis.