'Revival package not sufficient for RINL's long run': Former GOI secy

Hyderabad: While the NDA partners in Andhra Pradesh welcomed the Centre's announcement of a Rs 11,400 crore financial package to revive Rashtriya Ispat Nigam Limited (RINL), there are concerns that without captive iron ore mines, such financial packages won't help the PSU sustain itself over the long term.

A segment of the workforce is insisting on the merger of Visakhapatnam Steel Plant (VSP) with SAIL. Also, fingers are being pointed that the state government encouraging another steel plant in the private sector by ArcelorMittal in the same vicinity that may intrude into RINL's customer base.

“While the Cabinet's latest decision will no doubt enable RINL to pay its employees' salary arrears and their monthly salaries and it may also enable RINL to start full production with two blast furnaces in January 2025 or in the near future and with three blast furnaces in August 2025, it will not allow RINL to function in a financially viable manner and compete successfully in domestic and overseas steel markets, unless it is in a position to secure ready access to good quality iron ore from a captive operational iron ore source of its own. Without a captive iron ore mine, RINL would continue to be forced to buy ore from others at an exorbitant cost, which in turn would adversely impact its unit cost of production,” said former government of India's secretary, EAS Sarma who wrote a letter to union finance minister, Nirmala Sitharaman on Saturday.

While stating the Cabinet's latest decision to extend financial assistance to RINL is a positive move, on behalf of RINL's highly committed thousands of employees and on behalf of the people of north Andhra, Sarma said he would appeal to the Steel Minister and Nirmala Sitharaman to find ways and means to revive RINL in the long-run, for it it to be able to play its intended role of a strong CPSE competing successfully in the domestic and the overseas steel markets and, in addition, promote allround social and economic development of north Andhra region.

“On the basis of my interaction with RINL's employees and others who are genuinely concerned about the long-term viability and effectiveness of RINL as an "arm" of the State under Article12 of the Constitution, I feel that the most prudent way to revive RINL at this belated stage is to merge it with SAIL. Otherwise, I am afraid that such a half-hearted financial relief package will not help RINL in the long run and would only continue its painful "bleeding",” said Sarma.

The retired senior bureaucrat further said both the NDA government at the Centre and its TDP-Jana Sena partner in Andhra Pradesh are both working at a breakneck speed to give fast-track approvals to ArcelorMittal, a future private competitor of RINL, for locating its plant hardly a few kilometers from RINL's location near Anakapalle. Unlike RINL, ArcelorMittal group has already been able to have its own operating iron ore blocks allotted to it.

Former minister and YSRCP leader, Gudivada Amarnath said the financial package announced by the central government, falls short of expectations and clarity.

He accused the central government of failing to withdraw its privatization decision despite claiming to support the plant, leaving the employees and the public in confusion.

The former minister expressed alarm over the plant’s current state, stating that it is burdened by unmanageable debts and a dwindling workforce. Once run with 25,000 employees, the plant now operates with just 10,000, and the introduction of Voluntary Retirement Schemes (VRS) has further jeopardized its operations. He questioned how the plant would sustain itself if more employees were removed.

Amarnath demanded that the central government take decisive steps to ensure the steel plant’s survival and long-term viability. He called for a tax holiday for the plant, its merger with SAIL, allocation of captive mines for raw material self-sufficiency, and the transfer of plant lands, currently under the President’s name, to the steel plant itself.