In face of opposition from Chhatisgarh govt, Centre may drop plan to privatise NMDC’s Nagarnar plant

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Published: February 13, 2017 4:38:00 AM

Steel secretary Aruna Sharma told FE: “There will be no outright sale but steps will be taken for better management and running of the steel plant. However, it is too early (to take a call) and the plant is yet to be completed.”

The firm will invest in developing new mines, steel plant (Nagarnar), Legacy Iron ore company (Australia) and a slurry pipe line 9 from (Kirandul to Vizag), among others. (PTI)The All India NMDC Workers’ Federation — an umbrella body of trade unions affiliated to AITUC and INTUC — had threatened to bring the state’s Bastar region to a standstill if the unit is privatised. (PTI)

The Centre may drop the plan to privatise mining major NMDC’s under-construction Nagarnar steel plant in Chhattisgarh in the face of stiff opposition from the state government and trade unions; instead, it is likely to sell only minority stake in the three million-tonne plant. Steel secretary Aruna Sharma told FE: “There will be no outright sale but steps will be taken for better management and running of the steel plant. However, it is too early (to take a call) and the plant is yet to be completed.”

However, analysts said private steel firms are unlikely to be interested in minority stake in the unit and the government may have to eventually rope in a PSU, if it wants the plant to be run as a joint venture. Apart from the state government, which sees left-wing extremism regaining ferocity if the Centre goes ahead with the plan for strategic disinvestment of the steel plant, the All India NMDC Workers’ Federation — an umbrella body of trade unions affiliated to AITUC and INTUC — had threatened to bring the state’s Bastar region to a standstill if the unit is privatised. The local people, the unions claim, are also not in favour of privatisation fearing job losses.

Representatives of the federation, which had declared a two-day strike from February 20-21 in all units and work sites protesting against the plan, met Sharma last week. Federation secretary Rajesh Sandhu told FE that Sharma had assured them that there would be no privatisation and that only a joint venture partner would be inducted. The representatives who want the proposed partner to be only from the PSU fraternity have sought a written assurance from the government.

NMDC had in 2013 floated a global tender for roping in a partner with experience and expertise in making steel for the Chhattisgarh unit, but in vain. 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 last year, but have not come out with any proposal so far.
NMDC itself doesn’t want privatisation since it would mean a huge monetary loss for the company which might hamper its future expansion plans. A senior official also said NMDC has the expertise to run the unit and no outside partner is required to run the unit at 3-MTPA level.

“We have already pumped in around R11,000 crore from the internal accruals for the plant. However, the actual investment might go up to R23,000 crore because of cost overruns due to delay in completing the project. Who will buy the plant at that inflated cost, particularly when the steel industry has a huge ideal capacity?” he asked.
A pure-play miner, NMDC had in 2009-10 conceived the three-million-tonne-per-annum Nagarnar steel plant. The delay is mainly because of getting various clearances for the unit. The steel ministry’s intervention in various issues also delayed its implementation.

The official said it was never NMDC’s decision to venture into steel-making and that it was imposed by the Centre with the idea that moving up the value chain and diversifying its portfolio would only help the company in the longer run. The idea was also to hedge itself against the vagaries of iron ore prices.

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