State-owned Steel Authority of India (SAIL) has pushed the peddle on its R72,000-crore expansion-cum-modenisation programme following adverse remarks on its performance by steel minister Beni Prasad Verma.
A recent internal directive in the company has vowed to achieve 100% targets on production and project commissioning without fail. A meeting of senior officials has also been called in Delhi to identify problem areas that could delay work on projects so that advance action could be recommended.
The steel minister had last week expressed deep dissatisfaction over the tardy progress of the company?s modenisation and said that it had resulted in huge cost escalation and production loss.
SAIL has an expansion and modenisation plan of R72,000 crore where its production capacity will increase from 14 million tonne per year at present to 24 million tonne by 2013. The plan is already delayed by three years as earlier the company targeted to complete it by the end of 2010.
The company is facing problems in getting supplies from few overseas vendors whose are unable to adhere to agreed supply deadlines. Moreover, several work programmes are delayed on regulatory approvals or delays on part of contractors.
According to a company official, the seriousness of the issue will also be discussed at length during the July 29 board meeting of the company. All the plant in-charges have been summoned to attend the board meeting and apprise everyone of the plan of action to complete projects ahead of the december 2013 deadline.
The expansion plan includes modernisation of SAIL?s three plants at Burnpur, Rourkela and Bhilai. It had obtained the in principal approval for the modernization and expansion plan of IISCO Steel Plant (ISP) at Burnpur in July 2006. The plan includes setting up of new blast furnace, 7 metre tall coke oven battery etc. The project was estimated to cost R14,443 crore. However, due to delay the revised cost of the project is now R16,408 crore.
Though the SAIL chairman C S verma blamed difficult soil conditions for increase in civil and structural work substantially, therefore delaying the project, the minister was unhappy even at the project report which did not mention about such issues.
The Burnpur plant was scheduled to start operations from June this year. The date for its partially commencement has been shifted to December 2011.
The company is expected to mop up around R6,000 crore at the current market price from the markets with its much-awaited follow-on offer which is likely to come by Diwali this year. The concern is that its FPO also does not become a victim of its tardy progression expansion.