Visakhapatnam: The Central government has approved a substantial financial package of Rs 11,500 crore to revitalize the struggling Visakhapatnam Steel Plant.
The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, gave the green signal for the package during a meeting on Thursday. Union Minister for Steel and Heavy Industries HD Kumaraswamy and Civil Aviation Minister Rammohan Naidu are expected to make the official announcement soon. Andhra Pradesh Chief Minister Chandrababu Naidu has been closely engaged with the Centre regarding the revival of Visakhapatnam Steel Plant since assuming power. Over the last few months, he has met Prime Minister Narendra Modi and Union Ministers multiple times, making a strong case for financial assistance to sustain the plant. The discussions culminated in the announcement, in a much-needed relief or the steel plant which has been facing severe financial crises.
Struggling financially
Visakhapatnam Steel Plant, known for its annual steel production capacity of 7.3 million tonnes, has been grappling with massive losses in recent years. In the fiscal year 2023-24, the plant reported a loss of Rs 4,848.86 crore, while in 2022-23, the loss stood at Rs 2,858.74 crore. The primary reason for the financial distress is the high debt incurred for working capital, coupled with a shortage of raw materials and challenges posed by court attachments and insolvency proceedings.
During a recent visit of Union Steel Minister Kumaraswamy to the steel plant, Visakhapatnam MP Sribharat, TDP state president Palla Srinivasa Rao, and trade union leaders had sought financial aid of Rs 18,000 crore to ensure the plant’s sustainability. While the Central government had allocated Rs 500 crore earlier for GST payments and Rs 1,150 crore in two installments for bank loans pertaining to raw materials under the Emergency Advance Fund, the Rs 11,500 crore package is aimed at providing comprehensive support to the plant.
A comprehensive revival plan
The proposed Rs 11,500 crore financial package will be crucial in addressing the steel plant’s mounting financial issues. A significant portion of the package, approximately Rs 10,300 crore, is expected to be raised through bond redemption, with the remaining will be sourced through other means. The Union government has assured that a detailed roadmap will be unveiled soon to guide the implementation of the massive economic package.
High-level discussions led to approval
Over the last few months, the Chief Minister and Union Ministers have been holding continuous discussions to explore ways to revive Visakhapatnam Steel Plant. The NDA government’s focus on strengthening state-run industrial units has been evident in its recent initiatives to provide financial relief and operational support to various sectors. The Cabinet Committee on Economic Affairs’ approval marks a significant step towards ensuring the long-term viability of Visakhapatnam Steel Plant. With the financial backing, the plant is expected to recover from losses and contribute more effectively to the nation’s steel production needs. An official announcement regarding the details of the package is expected soon, which will provide further clarity on the execution plan.
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