Visakhapatnam Steel Plant unions oppose Andhra Pradesh government's decision to sell its stake in Gangavaram port

Published : June 16, 2021 11:19 IST

A view of Gangavaram port. Photo: The Hindu Archives

The Y.S. Jagan Mohan Reddy government in Andhra Pradesh has repeatedly urged the Narendra Modi government not to privatise the Rashtriya Ispat Nigam Ltd-Visakhapatnam Steel Plant (RINL-VSP), a Navaratna public sector enterprise and India’s only shore-based steel plant. However, it has decided to sell its 10.39 per cent stake in Gangavaram port, a modern deep-sea port located at Visakhapatnam, to Adani Ports and Special Economic Zone Limited (APSEZ), one of India’s largest commercial ports operators. The move has been opposed by employees’ unions and even business forums such as the Forum for Development of North Andhra (FDNA) for good reason: 80 per cent of the steel plant’s business passes through this port.

During the first week of May, the Andhra Pradesh Cabinet declared its intention to offload its stake in Gangavaram Port Limited (GPL) to APSEZ for around Rs.645 crore, a price that, according to many, is much lower than even the market price fixed by the Registration and Stamps Department for the 2,800 acres of land allotted to Gangavaram port by successive State governments.

The Gangavaram port was inaugurated in July 2009 by the late Andhra Pradesh Chief Minister Y.S. Rajasekhara Reddy, but it had been functioning since August 2008. Developed on a public private partnership model, the then State government had conducted a global bid process and selected a consortium led by D. Venkata Satyanarayana Raju, the co-founder of IT services firm Satyam Computer Services Ltd, to develop and operate the port. The government’s share of equity was 10.39 per cent. In August 2004, in pursuance of a Union Cabinet resolution of 2002, RINL-VSP handed over around 1,100 acres of land to the Andhra Pradesh government for development of the port. The State government paid Rs.20.02 crore to RINL-VSP for the land. The State government had given the same land a few years earlier to RINL-VSP for the development of a captive port and for afforestation around the steel plant.

In March, APSEZ announced the acquisition of Warburg Pincus’s 31.5 per cent stake in GPL and, a few weeks later, the 58.1 per cent stake held by D.V.S. Raju and family in GPL. The Competition Commission of India has already accorded APSEZ the requisite permissions to acquire the total 89.61 per cent stake in GPL. The Jagan Mohan Reddy government’s stake sale to APSEZ will, therefore, result in Gangavaram port becoming a wholly owned private port, something that is not acceptable to the labour unions.

In the early 2000s, RINL-VSP had come forward to set up a captive port at Gangavaram, but this did not find favour with the then State government, which was keen to set up a minor port at Gangavaram, adjacent to the steel plant, and allow the ownership of the port be in private’s hands. In keeping with this philosophy, the aforesaid 1,100 acres of land was passed on to the State government. Besides the financial amount, RINL-VSL was also provided land as compensation for the land it lost, but a hundred kilometres away from the coast, at Kotapadu.

Speaking to Frontline, J. Ayodhyaram, president of the RINL-VSP recognised union, said: “If the proposal to build a satellite port in association with the Visakhapatnam Port Trust had materialised, RINL-VSP would have had a port of its own, earning profits in the range of Rs.700 crore per annum.”

Unions are collectively of the opinion that the State government should transfer its 10.39 per cent stake in GPL to RINL-VSP. Doing this, they say, will allow the steel plant to exercise some control over the port, which is important given the heavy dependence of RINL-VSP on the port. Union members also expressed apprehensions that once the government sold away its 10.39 per cent stake in the port to APSEZ, the steel plant could be forced to enter into fresh agreements with the new management of the port and face a substantial hike in freight charges.