Bhushan Steel knocks on PMG door to save Rs 30,000-cr plant

Bhushan Steel’s (BSL) Rs 30,000-crore integrated steel plant has been rendered unviable following denotification of its captive coal block by the coal ministry last year, prompting the company to seek the project monitoring group’s (PMG) help to resolve the deadlock.

Confirming the development, BSL chief financial officer Nitin Johari told FE: ?We have approached the PMG under cabinet committee on investment to review the coal block that has been de-allocated. We want them to reconsider their decision.?

In its filing to the PMG, the company said the project can’t be taken forward in absence of assured supply of coal. “The cost of coal sourced from captive mines was Rs 700-900 per tonne as against from market at Rs 2,500-3,000 per tonne. In the absence of assured supply of coal, BSL is constrained to run its integrated steel plant at substantially lower capacity of below half capacity,” it said.

Since a substantial part of the capital outlay of Rs 30,000 crore was met through borrowing from banks and financial institutions, any delay on the project would not just hurt the company but also pile on the NPA of banks.

After the alleged scam over coal block allocations last year, the coal ministry de-allocated many captive coal blocks, including New Patrapara block allotted to BSL and seven others.

BSL said the decision on denotification was taken without properly hearing and appreciating facts and circumstances of the case.

BSL has now requested the government that unjustified decision of IMG should be withdrawn immediately and New Patrapara block should be restored to BSL and others.

Also, zero date of the coal block should be revised to the date of restoration and till such time, coal block comes into production, full coal linkage should be given to BSL for running its power plant and direct reduced iron (DRI), which are already in operations and starving due to lack of fuel.

The company was allotted coal block in New Patrapara after it signed a MoU with Odisha for setting up an integrated steel plant of 3 million tonne per annum capacity and captive power plant (CPP) of 155 megawatt to be located at Dhenkanal in Orissa.