Vizag Steel Plant: Central Approves Rs 11,440 Crore Package - Workers Seek Permanent Solutions

The Central Government has announced a ₹11,440 crore package to revive the financially troubled Visakhapatnam Steel Plant (Visakha Ukku). This decision was confirmed by Union Minister Ashwini Vaishnav, following the approval during a meeting of the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi.

Addressing Financial Challenges

Visakhapatnam Steel Plant, with a production capacity of 7.3 million tonnes per annum, has been grappling with significant financial losses. The plant reported losses of ₹4,848.86 crores in 2023-24 and ₹2,858.74 crores in 2022-23. These losses are primarily attributed to increasing debts taken to manage working capital.

To mitigate these financial difficulties, the Central Steel Ministry has already extended emergency advance funds, including ₹500 crores for GST payments and ₹1,150 crores in two tranches for settling bank loans related to raw materials. These measures aim to provide immediate relief and stabilize operations at the plant.

Comprehensive Plan for Revival

The plant faces several challenges, including a heavy debt burden, insufficient raw materials, legal attachments, and insolvency proceedings. In response, the government is formulating a comprehensive plan to ensure long-term sustainability and prevent future financial distress. A parliamentary standing committee has recommended expediting this process to secure the plant’s future.

Uncertainty Around Privatization

While the financial package offers temporary relief, uncertainty remains regarding the privatization of the plant. The Central Government has yet to issue a clear statement on this matter, fueling speculation and concern among stakeholders. Many believe that a merger with the Steel Authority of India Limited (SAIL) and the allocation of captive mines could be viable solutions to ensure the plant's long-term survival.

Demands From Labour Unions

Labour unions and plant employees have expressed concerns about the sufficiency of the package, arguing that it may primarily be used to clear existing dues without addressing the root causes of the plant's financial struggles. They advocate for a merger with SAIL and the conversion of current debts into equity, along with the allocation of captive mines to secure a stable and sustainable future for the plant.

The announcement of the package marks a significant step towards addressing the immediate financial issues of Visakhapatnam Steel Plant. However, the path to its full recovery and long-term viability remains a subject of ongoing discussion and strategic planning.