Vizag Steel Plant bid: How KCR upset the cart for rivals YSRCP and TDP

Delivering a blow to the credibility of Andhra Pradesh’s ruling YSR Congress Party (YSRCP), as well as Opposition Telugu Desam Party (TDP), the Telangana government has decided to bid for Vizag Steel Plant (VSP), a Navratna Public Sector Enterprise (PSE). Rashtriya Ispat Nigam  Limited (RINL) is the corporate entity of VSP.

Even as the two major Andhra parties were tacitly allowing the Centre to privatise VSP through ‘backdoor’ means, Telangana Chief Minister K Chandrashekar Rao (KCR) threw down the gauntlet. He wants to join the bidding through state PSUs Singareni Collieries Company Ltd (SCCL) and Telangana Mineral Development Corporation.

The Centre, which owns VSP completely, invited expressions of interest (EoIs) on March 27 from companies having an interest in the steel or raw material business. According to the notification, a potential partner can participate in the bidding either by supplying one or more raw materials (like coking/blast furnace coal, iron ore) or funding working capital, and in turn take steel products on mutually agreed upon terms and conditions.

Also read: In Telangana, Chandrababu ignites anti-Andhra fire with rice vs millet talk

The move is believed to be an indirect surrender of the plant to a private bidder, as a direct sale has been vehemently opposed by the employees of the steel plant.

An opportunity for KCR

Still, there has been no appropriate action on the ground from either YSRCP or TDP. With both parties busy ingratiating themselves to Prime Minister Narendra Modi, their opposition to the privatisation of VSP is limited to Twitter or periodic loud statements, at best extending support to agitating employees.

By adopting a resolution in the Assembly against the privatisation of VSP, the YSRCP government thinks it has done its best. And the TDP is morally weak on two counts. One, while in power in the state, it had taken the decision to privatise VSP during the NDA government led by Atal Bihari Vajpayee. Two, unlike KCR, it can’t afford to upset its own plan of cobbling together a 2014-like alliance with the BJP and the JanaSena by declaring war on the Centre.

Also read: How and why ‘Telangana’s daughter-in-law’ YS Sharmila is making waves in the state

Given Vizag Steel Plant’s emotional links to Andhra people, KCR found the YSRCP and TDP duo’s silent support to the Centre a golden opportunity to launch his Bharat Rashtra Samithi (BRS) in coastal Andhra, if not in the entire state, where Backward Classes outnumber Reddys and Kammas.

The last date to submit the EoI is April 15.

KCR’s move welcomed

KCR’s move is being curiously watched, as many are still in disbelief over how he is fighting for Andhra’s cause. Many feel his decision to participate in the EoI is a masterstroke to score political points over YSRCP and TDP and earn brownie points for the BRS in Andhra Pradesh.

Noted social activist and former joint director of CBI, VV Lakshminarayana, welcomed the move. “Thank you very much Sri KCR garu for the decision to participate in the EoI process of Vizag Steel Plant. Your step will bring real hope for the revival,” he tweeted, expressing hope that “the AP CM and SAIL also show similar interest in participation in EoI.”

A Chandrasekhar of the AP Human Rights Forum also appreciated KCR’s decision. “Whether Telangana’s attempt materialises or not, the decision to participate in the EoI is welcome,” he said.

“Though it is a move to oppose the Modi government’s attempt, KCR’s decision is bound to force the YSRCP and TDP to take a firm stand against the privatisation of VSP,” he said.

Former Union Energy Secretary EAS Sarma wondered if there was an indirect support from the state government to the Centre’s move.

Explained: All you need to know about Andhra’s Bhogapuram airport 

“The Centre is going fast to disinvest the plant despite Chief Minister Jagan Mohan Reddy writing many letters opposing the move,” he said, warning that the privatisation of VSP would trigger uncertainty for 17,000 employees, of which 7,000 are SC/ST/OBCs. “This is a serious issue the state ought to oppose without any hesitation,” Sarma said in a letter to Jagan.

CPI national secretary A Narayana, too, lauded the Telangana government’s decision to bid for the plant.

YSRCP govt stunned

However, the YSRCP government is perplexed by KCR’s move. Gudivada Amarnath, Andhra Minister for Industries and IT, said KCR’s policy lacks clarity. “Chief Minister KCR says he is opposed to privatisation and wants to acquire the plant at the same time. Is he not encouraging the sale of the plant by this?” he asked.

The TDP, however, blamed the YSRCP government for the VSP privatisation. Party spokespersons Dulipalla Narendra and former minister Bandaru Satyanarayana said the Centre was emboldened to go ahead with the selloff due to the support of Jagan. 

Also read: KCR, Jagan react in radically different ways as probe agencies zero in on kin

Reacting to the Telangana government’s move, they wondered why Jagan couldn’t chip in like KCR. Allocating Rs 6,000 crore to save a prestigious plant and thousands of jobs is not a big deal for the state, they said.

Not the first time

This is not the first time that VSP is facing privatisation. Its history is full of such attempts The plant itself was the result of a mass movement, with the battle cry ‘Visakha Ukku Andhrula Hakku’ (‘Visakha steel is Andhra’s right’) in 1966.

It survived many attempts of abandonment and disinvestment. Former Prime Minister Rajiv Gandhi proposed abandoning the plant in 1984 before its completion because of mounting cost overruns. He could not do it due to pressure from the state.

The plant was commissioned in 1992 with a huge debt. Showing the debt and accumulating losses as reasons, AB Vajpayee’s government tried to disinvest the plant with the help of its ally, the TDP government. The attempt was again thwarted by furious opposition from the workers and the people.

The threat resurfaced in 2010 in a new form. The UPA-2 government, while declaring its Navratna status, imposed a caveat that it should disinvest 10% of its stakes in the market to enjoy the benefits of the status. A call for a protracted agitation forced the government to withdraw the stipulation.

Also read: Why Adani’s mega project plans in AP are unlikely to go the Ras Al Khaimah way

When the Modi government took over, the privatisation proposal was renewed in a different form. A joint venture agreement with Korean company POSCO was signed but it did not take off. Now, the lack of working capital is being shown as a ruse for privatisation. 

There are even talks that the Adani Group is interested in acquiring the plant. Adani’s acquisition of the nearby Gangavaram Port is believed to be a step in that direction.