The Centre is firm on the strategic disinvestment plan for the under-construction, `15,525-crore steel plant of PSU miner NMDC at Nagarnar, Chhattisgarh, despite the recent deadly attack on CRPF personnel by left-wing extremists in the state. Sources told FE that the steel ministry will soon write to the state government, explaining why a private strategic partner was essential for the venture, while also assuring the state that the alliance won’t result in job losses or reckless exploitation of natural resources.
The ministry’s latest move comes after Chhattisgarh chief minister Raman Singh reiterated his stance in a recent letter to the Centre that the disinvestment plan for the 3-million tonne plant should be abandoned. Singh has warned that the move would result “in serious image deficit for the government” and could trigger unrest in the region.
CM Raman Singh also said that since the plant was still under consideration, any decision to sell it off to private players at this stage would complicate issues and result in delay in commissioning of the plant. Such a scenario, he added, would jeopardise the wealth creation opportunities for the existing stakeholders, including the government.
Going by the current pace of construction, the plant could be commissioned by 2017-end.
Steel ministry sources said NMDC lacked the expertise to run a steel plant of such a size and a private partner with experience could bridge this deficit. The plant would lead to overall development in the region, they said.
The Cabinet Committee on Economic Affairs (CCEA) had in November 2016 given its go-ahead for NMDC to offload 51% equity in the steel unit in favour of a private company. This was after NITI Aayog recommended such disinvestment. Upon receiving the concern letter from Singh, the steel ministry had sought the Aayog’s views again and the latter remained firm on its recommendation.
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. 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 some time last year, but have not come out with any proposal so far.
NMDC was also considering offering the maintenance and operational contract for the steel plant to another PSU steelmaker Rashtriya Ispat Nigam in lieu of sharing a fixed percentage of annual profit. The steel ministry has already ruled out state-run SAIL partnering in the venture as its “plate is already full”.