For over 800 days, ever since the Cabinet Committee on Economic Affairs gave in-principle approval for 100 per cent divestment of the Visakhapatnam Steel Plant (Vizag Steel) in January 2021 citing losses, workers and trade unions have been protesting. Then, on March 27, Rashtriya Ispat Nigam Limited (RINL), the plant’s corporate entity, issued an Expression of Interest (EOI) to address the two longstanding issues facing Vizag Steel: shortage of raw materials and working capital. This has brought renewed attention to the issue.
The EOI’s intent is to find national or international companies in steel or the steel raw materials businesses to partner with and sustain the steel plant. Workers and trade unions argue that allowing private companies to partner with Vizag Steel could hurt the plant’s interests.
“The spirit of Vizag Steel is being crushed in all possible ways,” said M. Sarat, vice president of Human Rights Forum, Andhra Pradesh State Committee. “The intention seems to be to show that the plant can no longer function without private support. This is deliberate.”
Over 30,000 steel plant workers and employees, permanent and contract-based, are determined to stop the Central government’s endeavour to privatise Vizag Steel.
Earlier, on March 7, the People’s Commission on Public Sector and Public Services (PCPSPS) released a statement saying that the “Centre’s decision to privatise RINL runs counter to its own publicly enunciated policy”. PCPSPS is a forum of eminent academics, erstwhile administrators, trade unions, people’s movements and civil society.
As many as 29 national and international companies have shown interest already. An RINL committee is reportedly looking into the submissions.
Trade unions’ demands
All trade unions representing the steel plant workers have urged that national public sector enterprises be allowed to participate in the bid. Speaking to Frontline, U. Ramaswamy, general secretary of the Steel Plant Employees Union, which is affiliated with the Centre of Indian Trade Unions (CITU), said: “We want the Steel Authority of India Limited or the National Mineral Development Corporation to participate when tenders get floated shortly.”
The CITU, the Indian National Trade Union Congress (INTUC), and the All India Trade Union Congress (AITUC) are the most significant unions at Vizag Steel. Over 20 other unions are registered with the steel plant, and most of them concur with these three. Visakhapatnam Ukku Parirakshana Porata Committee—a committee to protect Visakhapatnam Steel—is the official collective of unions working against the privatisation attempt.
“When government support and investment can revive Vizag Steel, privatising is irrational. We continue to be completely against that,” said K. Srinivas Rao of the Bharatiya Mazdoor Sangh (BMS). The BMS, backed by the RSS, has been vocal against BJP’s privatisation policies.
All union leaders Frontline spoke to said they had requested the RINL management to refrain from entertaining the submissions from Jindal Steel and Power Limited (JSPL) and the Jindal-led JSW group. They consider the Jindal firms to be a direct competitor to RINL. Jindal’s market interests, according to INTUC president Neerukonda Ramachandra Rao, are not ideal for Vizag Steel’s long-term goals.
Reiterating the unions’ earlier demands, Ramachandra Rao said: “Allocation of working capital and captive mines by the Ministry of Steel should be the first step to turning Vizag Steel around . That will stop the scramble for raw materials and reduce the additional expenditure the plant has to incur in sourcing them.”
Trade unions and activists have also been raising the issue of workforce shortage and the hiring freeze at RINL. “There has been no hiring in the past two years despite the vacancies caused by retirement,” Ramaswamy said.
A victim of apathy
Vizag Steel Plant has a chequered history. As many as 32 people were killed in police firings in 1966 in State-wide agitations in Andhra Pradesh demanding that the government fulfil its promise to establish a steel plant in Visakhapatnam.
It took nearly 25 years after that for the plant to start production in 1991.
“The steel plant’s capabilities were diminished before it went into production,” Sarat noted. “Both the production capacity and the total number of permanent employees were downsized.” By the time the plant started operations, the cost of construction had increased and the government did not pay the entire revised costs, Sarat said.
Despite the Central government’s apathy, and decades of capacity-damaging policy decisions, the non-allocation of a captive iron ore mine being a crucial omission, the plant survived. Vizag Steel has the capacity to produce 7.3 million tonnes per annum of liquid steel today, but its attempts to acquire a captive mine have been unsuccessful. RINL remains the sole Central public sector enterprise without iron ore allocation since inception. “Our profit margins are diminished because we buy raw material at a higher price,” Ramachandra Rao said.
In a letter to Nagendra Nath Sinha, Secretary, Ministry of Steel, in February, E.A.S. Sarma, former Secretary to the Government of India, said that it was “unfortunate that the concerned Central Ministries should allot captive mines on a silver platter to private companies but deny the same to RINL”. He has written multiple times to the Ministry of Steel in the past two years about Vizag Steel’s problems.
“I am constrained to infer that there is a deliberate, concerted attempt on the part of different Central agencies to weaken RINL so as to make it easy for a chosen business house to buy it for a song,” contended Sarma.
Since the Centre’s announcement of privatisation of Vizag Steel in 2021, almost all regional parties have offered solidarity with the employees and trade unions.
The ruling Yuvajana Sramika Rythu Congress Party in Andhra Pradesh, the opposition Telugu Desam Party, the Congress, and Jana Sena, among others, pledged their support to the steel plant. Most recently, Bharat Rashtra Samithi (BRS) joined the bandwagon.
- On March 27, Rashtriya Ispat Nigam Limited issued an EoI to address the two longstanding issues facing Vizag Steel: shortage of raw materials and working capital. This has brought renewed attention to the issue. As many as 29 national and international companies have shown interest already.
- Over 30,000 steel plant workers and employees, permanent and contract-based, are determined to stop the Central government’s endeavour to privatise Vizag Steel. All trade unions representing the steel plant workers have urged that national public sector enterprises be allowed to participate in the bid.
- The plant provides direct employment to over 15,000 permanent workers, executives, and 20,000 contract-based workers. It is estimated that a lakh families gain from direct employment, subsidiary industries, and as workers dependent on the factory.
A Singareni Collieries Company Limited (SCCL) team visited Vizag Steel in April. Telangana has a 51 per cent stake in SCCL, and the government of India owns the remaining 49 per cent. This, along with BRS working president K.T. Rama Rao’s comments, sparked speculation that Telangana might participate in the EoI.
However, despite the anticipation, SCCL stayed out. The popular opinion is that this was an opportune moment for the BRS to woo the people of Andhra Pradesh, a decade after the bifurcation of the State.
“Politically convenient games are being played, and some sections of the unions got swayed initially. Three days were wasted in the high-pitched drama surrounding the anticipation that SCCL might bid,” a trade union leader said. “For a short while, there was a split in the unions’ unity.”
V.V. Lakshminarayana, former CBI joint director and aspiring politician, has submitted an EoI and sought permission to crowdfund working capital for Vizag Steel.
Leaders and activists Frontline spoke to place no hope in political parties as of now. According to them, Vizag Steel is in want of a united front from the political parties, one which goes beyond press meets and pledges. “One must always remember that most parties are peddlers of privatisation,” a leader pointed out.
Towards the end of the EoI deadline (April 20), a few media reports said that Faggan Singh Kulaste, the Union Minister of State for Steel, had stated that the focus was on “strengthening the Visakhapatnam Steel Plant rather than privatising it at the moment”.
Following this, BRS leaders claimed victory over the “Centre’s U-Turn”. However, the celebration was short-lived as the Ministry of Steel clarified on April 14 that “there is no freeze on the disinvestment process of RINL”.
However, trade unions are determined not to give up. Vizag Steel, India’s first shore-based steel plant, was built by acquiring over 20,000 acres of land in Visakhapatnam. Experts value the market price of the land at Rs.1.5 lakh crore. The unions assert that land acquired for a “public purpose” should not be reassigned to a private firm.
Further, the plant’s undeniable contribution to the development of Visakhapatnam is well established. The plant currently provides direct employment to over 15,000 permanent workers, executives, and 20,000 contract-based workers. Over 5,000 temporary staff are routinely hired for maintenance work, Sarat said. It is estimated that a lakh families gain from direct employment, subsidiary industries, and as workers dependent on the factory.
According to Ramaswamy, prioritising workers’ welfare is one of the reasons the plant should remain a public-sector enterprise. For instance, reservation in employment in public-sector enterprises has transformative potential, he said. He also recounts the other contributions of Vizag Steel. “Despite the losses, the corporate social responsibility commitments were kept up,” said Ramaswamy, listing various works taken up in the recent past.
According to the PCPSPS statement, the Centre’s “muddled” approach to privatising RINL and “questionable developments” have public interest implications. It amounts to a “breach of public trust”, the forum stressed. It has suggested that the Centre revive RINL’s finances and management and allocate a captive iron ore mine.
Other recommendations include debt redemption through budgetary support, elimination of “mindless subsidies” to private companies, and a review of the Ministry of Steel’s iron ore export policy focussing on exporting value-added steel products instead of iron ore.
There are viable options and public support, but Vizag Steel can be revived and the privatisation bid scrapped only if the Central government so desires.