The central government has announced a significant financial package of Rs. 11,440 crore to revive the financially struggling Visakhapatnam Steel Plant. Union Minister Ashwini Vaishnaw confirmed the package on Friday, following approval from the Cabinet meeting chaired by Prime Minister Narendra Modi on Thursday.
Vaishnaw underscored the strategic importance of the Visakhapatnam Steel Plant in India’s steel industry and acknowledged the long-standing challenges it has faced. The package, which will take effect immediately, includes the initiation of two blast furnaces, with three additional furnaces scheduled to commence by August. Discussions are ongoing with NMDC for ensuring the supply of raw materials. Vaishnaw reiterated that the plant plays a crucial role in the nation’s self-reliance and meeting steel demands.
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The Minister also highlighted the consistent focus on the plant, dating back to Chief Minister Chandrababu Naidu’s administration. He noted that each visit to Delhi involved discussions with Prime Minister Modi, Finance Minister Nirmala Sitharaman, and the Steel Minister on addressing the plant’s challenges. After detailed deliberations, the Cabinet approved the Rs. 11,440 crore package.
The Visakhapatnam Steel Plant, with an annual production capacity of 7.3 million tonnes, reported losses of Rs. 48,488.86 crore in 2023-24 and Rs. 2,858.74 crore in 2022-23. These losses were primarily due to rising borrowings for working capital. Following the NDA coalition’s return to power, Steel Minister Kumaraswamy visited the plant, where local MP Bharath and labor leaders highlighted the need for Rs. 18,000 crore to revitalize the facility.
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In response, the Ministry of Steel provided emergency funds, including Rs. 500 crore for GST payments and Rs. 1,150 crore in two installments to address bank loan repayments. The plant has been facing several challenges, including mounting borrowings, insufficient raw materials, court attachments, and insolvency proceedings.
The central government has prepared a comprehensive plan to resolve these issues and ensure the plant’s sustainability. The plan was submitted to the parliamentary committee, which recommended urgent action. The central government has now approved the financial package, which is expected to support the plant’s recovery and return to profitability. Union Minister Rammohan Naidu expressed his satisfaction with the approval, emphasizing its importance in halting losses and facilitating the plant’s recovery.