The Centre has initiated the process of strategic disinvestment in state-run miner NMDC’s under-construction 3 MTPA, `15,525 crore steel plant at Nagarnar in Chhattisgarh by appointing transaction and legal advisors as well as asset-valuer. In a communique to the stock exchanges, the Hyderabad-based firm said the department of investment and public asset management (DIPAM) has prepared strategic disinvestment plan for the plant as per the decision of Cabinet Committee on Economic Affairs (CCEA). “It is to clarify that, the very preliminary activities viz., the appointment of transaction advisor, legal advisor and asset valuer for NISP (steel plant) has been completed and they have started collecting details,” it said, without giving any further details.
Sources said that the Centre may not go for outright sale of the unit, but it is likely to divest only a minority stake to ensure better management and running of the steel plant. A pure-play miner, NMDC had, in 2009-10, conceived the Nagarnar steel plant with the intention of moving up the value chain and diversifying its portfolio. The idea was also to hedge itself against the vagaries of iron ore prices.
Questions were raised on the decision in the steel ministry itself as many felt that NMDC would better serve its mandate by harnessing its mining expertise. In 2013, a global tender was also floated by NMDC to rope in a partner with experience and expertise in making steel for the Chhattisgarh steel unit, but in vain. The government has been toying with the idea of disinvestment of the unit for long.
CCEA had, in November 2016, given its go-ahead for NMDC to offload equity in the steel unit in favour of a private company. This was after NITI Aayog recommended such disinvestment.
Meanwhile, Chhattisgarh chief minister Raman Singh has warned the Centre that the disinvestment plan for the 3-million tonne plant should be abandoned as it would result ‘in serious image deficit for the government’ and could trigger unrest in the Bastar region.
NMDC employees and its union are also against disinvestment of the unit. There is a local feeling against disinvestment as well. The people want the unit to retain its public sector character and are against giving management control to a private firm mainly because it would lead to neglect of the promised associated development of the Maoist-infested region. The number of job opportunities might also be less under a private management.
The government has been toying with the idea of disinvestment since then. Representatives from South Korean steel major Posco, which has been struggling to find a solid foothold in India for long, had also visited the plant sometime last year, but have not come out with any proposal so far.