Vizag steel plant on the brink of closure; all parties in Andhra remain silent

This is because the workers at RINL's protest against the Union government's attempt to privatize the plant has led to the scarcity of raw materials, particularly coking coal.

The plant’s third blast furnace is on the verge of closure as the coking coal stocks may not last more than a week. RINL has three blast furnaces, one of which has not been in operation since March 2024 and the second one was closed on September 12, 2024.

Alarming situation

The situation is alarming, said U Ramaswamy, general secretary of the CITU-affiliated Steel Plant Employees Union. “For the first time since the plant's inception in 1982, the company is facing the threat of a shutdown due to a cash crunch,” he said.

Further, he complained that there seems to be no sense of urgency among the political parties in the state even though the closure of the factory will become a ploy for the Centre to quickly privatize the plant.

Vizag-based activist and former IAS officer EAS Sarma pointed out that the Centre is creating an adversarial environment for handing over the highly valuable public sector assets and manpower to a private company for a song.

According to inside sources, the company is grappling with a severe cash crunch and cannot pay even shipment charges for coal stuck at Gangavaram and Visakhapatnam ports.

Former BJP Rajya Sabha member GVL Narasimha Rao had also urged the Centre some time ago to release ₹ 3,110 crore financial assistance to tide over the crisis. He called on Union finance secretary TV Somanathan, and submitted a representation seeking immediate financial assistance.

No help, however, has been forthcoming from the Centre.

Political parties stay silent

What surprises many is the lack of response from the political parties, be it the ruling party or the Opposition. Their emotional attachment to Vizag Steel appears to have ended with the Assembly elections. When the Centre had announced its policy to privatize the company in 2021, keeping in view the next Assembly election, parties vied with each other at that time to turn it into a big issue.

Telugu pride was brought into focus and dominated the narrative.

Opposing the policy, the Andhra Pradesh Assembly adopted a resolution, moved by the then chief minister YS Jaganmohan Reddy. It was supported by the Opposition TDP led by Chandrababu Naidu, who had demanded that the chief minister should lead an all-party delegation to Delhi to persuade the Centre to scrap the decision to privatize RINL.

Later, Ganta Srinivasarao, a TDP MLA from North Vizag Constituency, went so far as to resign from the House to protest the move.

In 2023, the then-Telangana chief minister K Chandrasekhar Rao (KCR) also pitched in. Stating that he wouldn’t allow the privatization of the plant, which was achieved after many sacrifices, Rao said Telangana’s Singareni Colleries Company Limited (SCCL) and Telangana Mineral Development Corporation would join the bidding to acquire the company.

However, Jagan and KCR lost the elections. In Andhra Pradesh, the TDP-Jana Sena-BJP alliance has come to power.

Changed political scenario

Many political observers consider the changed political scenario the reason behind the muted response. Neither the ruling parties, TDP and Janasena, nor the Opposition YSR Congress are in a position to strongly oppose the privatization move as they used to. Significantly, barring the Left parties, no other party has joined the ongoing agitation of the steel plant employees.

Chandrababu Naidu won’t talk openly on the issue as his priorities have changed after coming to the power, observed Punuru Gowtham Reddy, president, YSRC Trade Union Congress

“There is unanimity that the RINL is passing through a financial crisis and possible closure of the production looks imminent. Naidu could have passed a cabinet resolution seeking immediate release of funds to procure raw material and coal. He has not done so. It clearly shows he is indirectly helping the Centre to go ahead with the privatization,” Reddy alleged.

Andhra's special bond

The people of Andhra Pradesh have a special bond with the Vizag Steel. In 1963, when the Centre had decided to set up a steel plant in the country in 1963, there was stiff competition from Odisha, Karnataka, Andhra Pradesh and Tamil Nadu to bag the project.

The government had appointed British American Steel Works for India Consortium (BASIC) to recommend a suitable location for the plant. The port city Visakhapatnam was finally chosen as location after violent agitations triggered by the fast unto death by T Amruta Rao, a Gandhian from Guntur. The agitation had claimed 32 lives forcing Prime Minister Indira Gandhi to announce the plant’s location in Vizag in 1970.

The foundation stone for the plant was laid by Indira Gandhi in January 1971. Land to the extent of 22,000 acres was acquired from 68 villages, and the first blast furnace was inaugurated by prime minister V P Singh around two decades later in 1990. With direct and indirect employment and other opportunities, it has changed the economic profile of north Andhra Pradesh. The huge land bank is the attraction for private companies.

Andhra Chief Minister Chandrababu Naidu, however, assured the people that he would try his best to prevent the privatization of Vizag steel.

Addressing the media in Vizag, on September 17, amid flood relief operations, he recalled how he had stalled earlier attempts to disinvest the plant during the regime of Atal Bihari Vajpayee. He blamed the previous YSR Congress government’s lack of concern for the present condition of RINL.

Union govt response

Meanwhile, the Union government has reiterated that it would go ahead with its plans to disinvest the Navratna public sector unit.

Writing a letter to Golla Baburao, a YSR Congress Rajya Sabha member, on September 10, Pankaj Chawdhary, MOS, finance, said, “The strategic disinvestment of Government of India’s equity in RINL will lead to the infusion of capital for the optimum utilization, expansion of capacity, infusion technology and better management practices. This will result in higher production and productivity and expansion of direct and indirect employment opportunities.”

The letter, written in response to a query in the Rajya Sabha, further underscores the Centre’s strategy of allowing the plant to reach the brink of a severe fund crisis before closing it down.