The central government has approved a massive financial package of Rs. 11,500 crore to revive the ailing Visakhapatnam Steel Plant, which has been facing severe financial challenges. The decision was reportedly cleared by the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, and is likely to be formally announced by Union Minister for Steel and Heavy Industries HD Kumaraswamy and Civil Aviation Minister Rammohan Naidu.
Chief Minister Chandrababu Naidu has been actively promoting the revival of the steel plant. During his visits to Delhi, he has consistently met with the Prime Minister, Finance Minister Nirmala Sitharaman, and Steel Minister Kumaraswamy for financial assistance. His latest meeting with PM Modi seems to have worked in getting this package cleared.
Addressing Financial Losses
Visakhapatnam Steel Plant, which has an annual production capacity of 7.3 million tonnes, has reported a loss of Rs. 4,848.86 crore during 2023-24 and Rs. 2,858.74 crore during 2022-23. The reasons for this are the escalating loan costs to work capital.
It has become more sensitive after the NDA government came into power in Andhra Pradesh. Union Steel Minister Kumaraswamy, during a visit to the plant, met local leaders and trade unions. They insisted on Rs. 18,000 crore to stabilize the operations. Accordingly, the Central Steel Department extended interim relief under the Emergency Advance Fund by arranging Rs. 500 crore GST payment and raw material-related bank loans of Rs. 1,150 crores in two installments.
Comprehensive Revival Plan
The plant's challenges, such as debt burdens, raw material shortages, court-related issues, and insolvency proceedings, necessitated a holistic approach. The Central Government had informed the Parliamentary Standing Committee of its intention to create a comprehensive revival plan to address these problems and prevent future crises.
This package is said to provide Rs. 10,300 crore through bond redemption, and the rest of the amount will be raised through other financial instruments. The details of the package are likely to be announced by Union Minister Kumaraswamy in an official statement soon. A press conference was scheduled for Thursday evening, but it was postponed due to some unexpected reasons.
