On the protests against the Vizag steel plant sale | Explained

Vizag steel plant employees and trade union members stage a protest against the central government’s decision to privatise the Rashtriya Ispat Nigam Limited (RINL), in Visakhapatnam, in 2021.
| Photo Credit: PTI

The story so far: Ever since Finance Minister Nirmala Sitharaman announced the 100% strategic sale of the Rashtriya Ispat Nigam Limited (RINL), the corporate entity of the Visakhapatnam Steel Plant (VSP), in January 2021, employees of the plant affiliated to various unions such as AITUC, CITU and INTUC, have protested against the move and stalled all plans of takeover by any private company. The VSP is the only shore-based steel making public sector unit (PSU) in the country.

What is the status of the plant now?

So far neither the designated members of the Legal Committee or the Assessment Committee have been able to enter the plant in order for the government to issue an Expression of Interest as protestors keep stalling them. Thus, the sale plans have been delayed, and the Union Government has stopped extending support to the plant.

Moreover, in the last three years, the plant has ended up making huge losses and its daily production has come down drastically, since only one blast furnace is now operational among the three furnaces. The management has cut all benefits for employees and salaries are delayed by over 20 to 30 days every month. The plant is so cash strapped that it is unable to draw even imported coking coal for its coke oven from the warehouses at the Gangavaram and Visakhapatnam ports. The plant at present has about 12,600 permanent employees and 14,000 casual workers.

Why is the VSP called a legacy plant?

The VSP has an emotive connection with the people of Andhra Pradesh. The struggle for the setting up of the plant in Visakhapatnam dates back to 1963 when Chidambaram Subramaniam, senior leader in the ruling Congress party and Minister, had announced the setting up of a shore-based steel plant in Visakhapatnam. Subsequent to the proposal, on July 1, 1966, the State Assembly, then led by Chief Minister Kasu Brahmananda Reddy, unanimously passed a resolution favouring the plant in Visakhapatnam.

But thereafter there was no progress on the project till Amrutha Rao a leader from Guntur took up a fast unto death at the gate of the Visakhapatnam District Collector’s office, from October 15, 1966. Thereafter, things started to heat up, as students of various colleges in Andhra Pradesh took up the mantle of the protest. The protests then turned into State-wide strikes and led to the killing of 32 people in the month of November, across the State. The slogan Visakha Ukku Andhrula Hakku (Visakha Steel: the right of the people of Andhra) resounded across the nation and shook the then Congress government at the Centre. Therefore, on April 10, 1967, Indira Gandhi announced in Parliament that a steel plant would be set up in Visakhapatnam. About 20,000 acres of land from 68 villages were acquired for the plant and on March 20, 1990, the first blast furnace was dedicated to the nation.

Why did the Centre decide to sell?

The VSP has a huge land bank of about 20,000 acres that has a market value of about ₹1 lakh crore. Employees say that private entities are looking at it for its real estate value. The plant also has the latest technology and its capacity can be expanded up to 20 million tonnes. It manufactures high-grade quality steel and has good market presence. Additionally, it has two major ports in its backyard, within a 20 km radius.

However, the plant as of yet has not been allotted any captive iron ore or coal mines. As per the Mines and Minerals Act, every steel plant must be allotted iron mines for its sustainability. Since VSP doesn’t have one, an additional ₹4,000 crore is spent on buying iron ore at higher prices. This clubbed with the payment of interest on accumulated loans of about ₹18,500 crore, has been pulling the plant down. The Union Government has not alloted a mine, despite the VSP making several requests, says former Chairman of VSP Y. Sivasagar Rao.

What next?

The protestors have two main demands. One is that the VSP should be given a captive mine. CPI(M) State Secretariat member and veteran leader Ch. Narasinga Rao says that the Union government instead of selling off the plant should allot captive mines and write off the loans, as VSP has paid over ₹58,000 crore to the Centre in form of taxes so far.

The other demand is that the plant can be merged into the SAIL (Steel Authority of India Limited). SAIL is planning a 20 MT expansion, for which it needs an investment of about ₹6,000 crore. If they take over VSP and start all its furnaces, take production to 100% and supply iron ore from its mines, it will get a 7.3 MT steel producing plant on a platter. This is a win-win situation for all including SAIL, VSP as well as the government, points out VSP employees and union members.

The strategic sale of the VSP has been a political issue and was used as plank in the 2024 elections. All parties including NDA partners such as TDP, JSP and now opposition parties YSRCP had promised to bail out the plant and see that the Centre does not go ahead with its sale. In a meeting with the FM, Steel Minister and the CM that was convened on October 8 in Delhi, it is learnt that the Centre is thinking of a revival package or a merger with SAIL. But this discussion has been going on since long and only time will tell what is in store for the RINL-VSP.