Privatization of Vizag Steel Plant | Soma Marla

The UK based steel multinational ArcelorMittal, has found favour with both Union and Andhra Pradesh (AP) state governments to establish a steel factory, located hardly a few miles away from the public sector Visakhapatnam steel plant (RINL). Both governments are actively working together to fast-track clearances for the steel plant largesse, including free power, land, water, waiving GST and other taxes. Andhra Pradesh Chief Minister Mr Chandrababu Naidu, contrary to his recent poll promise to avert privatization to secure the public sector RINL steel plant, recently urged the Union government to allocate ArcelorMittal, a few captive iron ore blocks at cheaper price than to charged to public sector RINL. In fact, RNIL badly needs allocation of iron ore blocks located in its vicinity by Union government to sustain present production, which he did not ask for.

Well known are the dubious motives of Union Steel Ministry to weaken RINL, gradually eroding its financial strength to privatise it finally in bits and pieces. Recently plant’s blast furnaces are shut, several of its auxiliary production, service units are privatised. Employees are not being paid their salaries and arrears. Creation of logistic hurdles in RINL in accessing inputs, appear to be a well-orchestrated move on the part of the Steel Ministry to make it sick and on this pretext sell RINL for a pittance to a favoured private player.

Remarkable performance

The plant was established in 1982 after a long and widespread militant agitation by the people of United AP. Dozens of people were martyred in the agitation and all members of both the Communist Party of India (CPI) & Communist Party of India Marxist (CPM) in the state legislature and veteran communist leader Yelamanda Reddy (then a member of Lok Sabha) resigned seeking the establishment of the steel plant. In course of four decades of its existence, the steel plant played a significant role in the industrialization and development of the backward eastern Andhra region. The plant has valuable machinery and employs nearly 16,000 regulars apart from several thousands of contract workers. The public sector steel plant possesses valuable machinery including high-capacity furnaces and has a production capacity of 6.3 M tons with an annual turnover of Rs 23,000 crores. With a record sale of 7.3 tons of quality wire coil rods, re-bars, ballets, and billets are well known in global markets. The plant registered a growth of 43% in the financial year 2023-24 as compared to the previous year, is far ahead of any private or public sector steel plant in the country. Besides The steel plant‘s huge stretch of land of 19,730 acres, cost around Rs 2 lakh crores of value. Attempts to hand over this valuable land at a pittiance to private players like Adani group.

Striking workers

Present NDA government as part of it’s neoliberal economic reform agenda, pursuing ruthless privitisation of public sector units and assets for the last eight years. All attempts are being made to privatize the public sector steel plant and hand it over to other private steel firms. Already, many production units of the plant are either closed, downgraded or privatized piece by piece. Central funds have been stopped and the supply of coal and iron ore are reduced to critical levels to scuttle production. For the last four months factory management is not paying salaries to workers and this money is being used to run the plant. Workers are agitating for for payment of salaries and dues Payable to them. There is a huge outcry in AP against the attempts to privitise the steel plant.

Defeats Self Reliance

India is a developing nation, and needs huge quantities of steel for industrialization, infrastructure building and development in different sectors of economy. Soon after independence, when country planned to establish steel plants none of the western nations came forward. But erstwhile USSR had generously collaborated and assisted in building iconic steel plants like Bhilai, Bokaro and others. Similarly in early 80’s of the last century USSR had provided all technical assistance, world class steel furnaces and other infrastructure. Today India is the second biggest steel producer in the world with 143.6 million tonnes of crude steel and 138.5 million tons of superior quality finished steel. Contributed to the nations self reliant economy but went to help other South Asian and African developing nations by establishing mini steel plants.

However, for the last two decades successive union governments, especially the present NDA government as part of its neoliberal economic agenda, is actively pursuing policies to weaken or close various important public sector factories around the country. The stepmotherly treatment of Union government mooted to Vizag steel plant and privitize by all means is being met with huge public outcry and resistance. Ready access to raw iron ore (pig iron) and coal are essential to cut unit cost in steel production. Having access to iron ore mines located in Orissa or Chattisgarh significantly reduces cost of unit steel production. But with bias to private players, the NDA government has deliberately denied that minimum facility for the Vizag steel plant, whereas the same NDA government has had no hesitation whatsoever to allot more than one iron ore mine to many private manufacturers. Under the liberal mineral policy, several mines are dolled out to private steel manufactures at very subsidised prices. For example, in an extraordinary gesture union government allotted as many as 13 iron ore mines to a single private steel firm in a single go.

Blow To Social Justice

RINL has played a crucial role in creating wide-ranging employment opportunities for professionals, promoted social empowerment, and all round growth of auxiliary industry comprising of lakhs of small enterprises. As on today, the plant employs 27,900 (including contract workers), a majority belonging to who belong to SCs/STs/OBC communities. Private companies are likely to do away with the reservations, ending the Constitutional safeguard for reservations for SCs/STs/OBCs. Privatisation of RINL Visakhapatnam steel plant amounts to rejection of employment opportunities to aspiring lower sections of AP.
 
All major Central Trade Unions and left parties have formed an united action Coordination committee and organizing relentless truggles for more than 4 years (1400 days) opposing privatization attempts by Union government.

Some of their demands include:

• Merge Vizag steel plant with SAIL (Steel Authority of India). As both SAIL and RICL Vizag are public sector entities and merger will provide secure future for Vizag steel plant. SAIL has sufficient access to good-quality iron ore resources and adequate financial strength able to resurrect RINL. In the long run, the merger will be mutually beneficial for both SAIL and RINL, one adding strength to the other.

• The highest priority should be given to employment security and payment of salaries and salary dues to RINL’s employees and boost up their morale.

• Allocate iron ore and coal mines located in near by Orissa and Chattisgarh to RICL to guarantee steady supply of raw materials. This will cut the unit cost of steel production and make the public sector plant more competitive.
• Immediately withdraw wholesale disinvestment and privatization of public sector units implemented as part of government’s neoliberal economic reforms. Public sector assets are jewels of India that need to be secured for nation’s self reliance and overall development.