Hyderabad: As the construction of proposed Bayyaram steel plant is a cost-intensive project, the Telangana government is keen on roping in India's leading steel manufacturing companies in the establishment of the much-delayed integrated steel plant in the erstwhile Khammam district.
The government has estimated that it required at least Rs 7,000 crore to set up the plant with one million tonne production capacity and up to Rs 15,000 crore and Rs 21,000 crore if the capacity is two and three million tonnes, respectively.
The five-member official committee, headed by Special Chief Secretary (Energy) Ajay Mishra and constituted to prepare a feasibility report for the establishment of Bayyaram steel plant, has come to a conclusion that the plant with less than one million tonne capacity is economically not viable.
Based on the availability of low-grade iron ore reserves in Bayyaram area of Mahabubabad district and import from the neighbouring Chhattisgarh, the installed capacity of the plant will be between 2 million and 3 million tonnes for which it required nearly Rs 15,000 crore to Rs 21,000 crore.
The committee is exploring the options mainly the role of private partners and government equity if the project is taken up in PPP mode. The Telangana State Mineral Development Corporation (TSMDC) will be the main stakeholder under public private partnership.
The other option to set up the plant under BOT (Build Operate Transfer) or 100 per cent private investment is also under consideration, officials said. “The government wishes to set up the plant jointly by the TSMDC and Singareni Collieries Company Limited (SCCL). The decision to invite private investments will depend on the plant’s total installation capacity.
The role of private partners will be finalised once the plant capacity is confirmed,” a senior official said. Sources said the committee will submit the first technical and feasibility report to the government by July end. Based on the recommendations, the Industries department in consultation with the finance wing will take up another study to finalise whether the role of private partners is required to set up the plant.
The government has already entrusted Public Sector Consultancy organization- MECON to prepare a DPR (Detailed Project Report) on the steel plant within two months and Rail Vikas Nigam Limited (RVNL) to submit feasibility report on laying railway line from Bailadilla (Chhattisgarh) to Manuguru (near Bayyaram) for the supply of iron ore to the proposed plant. The NMDC has already come forward to supply iron ore from its mining reserves to the state.