The Cabinet Committee on Economic Affairs had given its go-ahead for the “strategic disinvestment” of the unit in late 2016.
The plan to privatise state-run NMDC’s yet-to-be-commissioned three million tonne per annum steel plant at the Bastar region of Chhattisgarh got a fillip with the company board on August 27 approving de-merger of the unit from the parent. The Cabinet Committee on Economic Affairs had given its go-ahead for the “strategic disinvestment” of the unit in late 2016.
Meanwhile, Chhattisgarh chief minister Bhupesh Baghel has written to the Prime Minister Narendra Modi on August 26 requesting him to reconsider the decision of privatisation as it might rekindle naxalite activity in the region.
“It is very unfortunate that the proposed steel plant is being privatised. It will deeply hurt the hopes and aspirations of millions of tribal people. As a result of the decision by the Centre, tribals are getting agitated,” the chief minister said in the letter.
The local government had also earlier expressed reservations over privatisation, citing the Left-wing extremism in the Bastar district, where the plant is located, could regain ferocity if the Centre goes ahead with the plan. But, the Centre was firm on its decision as it obtained that a private strategic partner might bridge the knowledge deficit since NMDC is a pure-play miner.
The disinvestment proposal may also fuel the feeling of discontent among those who gave up their land for the steel plant, an NMDC union member said. Those who gave up land wanted the unit to retain its public sector character and were against giving the management control to a private firm. Apart from compensation, NMDC has offered one job for each of those 838 families. NMDC has already completed imparting training to make one each from all the families employable in the plant.
NMDC had in 2009-10 conceived the idea of the plant on persuasion of the steel ministry which thought that venturing into steel-making would help NMDC to diversify and move up the value chain which, in turn, would help the company in the longer run. The idea was also to hedge itself against the vagaries of iron ore prices.
Initially, it was estimated that the greenfield plant would require around Rs 15,525-crore investment and would go on stream by March 2015. However, various issues including naxalite agitation and delays in implementing various packages by the vendors including BHEL led to the delay in commissioning.
Sources said NMDC has already put in Rs 17,000 crore into the plant and an additional Rs 6,000 crore may be required to be infused before commissioning the plant towards the middle of next year. NMDC may go in for raising debt to part-fund the rest.