Centre likely to give its nod for Kakinada petro complex
- Chief Minister Jagan Mohan Reddy asks for waiver of Viable Gap Funding
- Jagan urges Centre not to privatise Vizag Steel Plant
New Delhi: The Centre is likely to take a positive decision to set up a petro complex. A meeting will be scheduled next week with the Chief Secretary and the officials of the Petroleum Department to finalise the procedures.
On his second day of a two-day visit to Delhi, Chief Minister Y S Jagan Mohan Reddy held over an hour-long discussion with Union Minister for Petroleum, Natural Gas and Steel, Dharmendra Pradhan on the Kakinada Petro Complex and VSP, according to an official statement.
As the Centre has asked for Rs 975 crore per annum under viability gap funding (VGF) for 15 years, the Chief Minister requested to cut down VGF as the State could not bear such a burden in the present circumstances. Reddy said the Central government has reduced the corporate tax by 25 per cent and the overall rate of interest across the world had also been reduced. He added that the project can be made possible without any VGF.
The Chief Minister urged the Union Minister to reconsider the decision to privatise the Visakhapatnam Steel Plant. He informed the Union Minister to consider alternatives suggested by the State Government. Jagan said that over 20,000 people were directly employed, and many more thousands were indirectly dependent on the plant. The Chief Minister explained that VSP performed well and made profits between 2002-2015. The plant has gone through an expansion by taking loans, but due to the slump in the international market during 2014-15, the organisation fell into debt with the increasing operational costs and lack of own mines.
In fact, VSP has achieved the highest-ever capacity utilization of 6.3 MTPA (million metric tonnes per year) against the installed capacity of 7.3 MTPA and started making a monthly profit of close to Rs 200 crore and continuing this performance for a further period of two years will result in improving the financial situation. The plant has 19,700 acres of land which is worth in crores and can be monetised to clear the crisis, he said.
Currently, RINL (Rashtriya Ispat Nigam Limited) is purchasing iron ore from the National Mineral Development Corporation (NMDC) Bailadila mines at a market price of around Rs 5,260 per metric tonnes of steel. Many of its competitors have captive mines for over 60 per cent of their requirement and buy only the rest from the NMDC. Even the Steel Authority of India Limited (SAIL) has own captive mines with reserves of iron ore enough for 200 years. This excess cost of iron ore has cost implications of more than Rs 3,472 crore for the plant and it is essential to have an allotment of captive mines in order to overcome the cost disadvantage. He said the State was ready to work with the relevant central departments to protect the company from being privatised.