With the proposed ultra-mega steel plant (UMSP) in Odisha not making the desired headway, the state government has urged the Union steel ministry to take expeditious steps for signing of memorandum of understanding (MoU) among the equity partners.
The UMSP was originally supposed to be developed as 50:50 joint venture between National Mineral Development Corporation (NMDC) and state run miner Odisha Mining Corporation (OMC).
However, steel PSU Rashtriya Ispat Nigam Ltd (RINL) has evinced interest to pick up stake in the special purpose vehicle to be formed for the project. But, the percentage of stake to be held by RINL is yet to be finalised and this has ostensibly held up signing of the MoU.
“The two central PSUs need to arrive at a consensus on their equity holding in the SPV. The state government has written to the Union steel ministry to take steps for signing of MoU, which will pave the way for SPV formation and further progress on the project,” said a government official.
It may be noted that MoU for the UMSP proposed in Chattisgarh’s Bastar region is scheduled to be signed on May 9. Steel Authority of India Ltd (SAIL) and NMDC are equity partners in the SPV to be formed for that project.
With Chattisgarh moving ahead, Odisha too, is keen to fast track its UMSP.
At the last review meeting held here on the UMSP, it was decided that both NMDC and OMC would have 50 per cent equity each. But with RINL now keen to join the project, NMDC is likely to dilute some stake. “It can be 25 per cent equity each for NMDC and RINL. But the exact shareholding is yet to be decided,” said the official. The steel mill, with a projected capacity of five to six million tonne per annum (mtpa), is likely to come up under Patna tehsil in Keonjhar. The site was earlier identified for the 12 million tonne steel plant by ArcelorMittal, but the company had later withdrawn from the project.
NMDC had submitted a draft tripartite memorandum of agreement to the Odisha government. The government had conveyed its in-principle approval to form SPV by NMDC, OMC and Odisha Industrial Infrastructure Development Corporation (Idco). The entry of RINL would mean some changes in the agreement terms. Now, it can be a quadripartite pact involving NMDC. RINL, Idco and OMC. Idco will not have any stake in the project and only play the role of a facilitator. For ArcelorMittal’s steel project, Idco had identified 2,847.50 acres of government land and 4,905.80 acres private land in 14 villages under Patna tehsil. NMDC has evinced interest to set up UMSPs in four mineral rich states such as Odisha, Jharkhand, Chhattisgarh and Karnataka in line with the ultra-mega power projects (UMPPs) of the Union power ministry.
The Union steel ministry has identified two sites in Odisha, both in iron ore rich Keonjhar district, for establishment of steel mills, each with capacity of 5-6 million tonne per annum (mtpa) in the first phase. The UMSPs are planned to help meet the ambitious domestic steel output of 300 mtpa by 2025.
In its proposal, the steel ministry had argued that setting up these plants will bridge the widening demand-supply gap of the metal, since imports were rising. It had also proposed a Steel Finance Corporation (SFC) as an SPV on the lines of Power Finance Corporation (PFC) to finance the projects on a fast-track basis over the next few years. The SFC was to have an initial corpus of Rs 1,500 crore and would be conferred the status of a non-banking financial company.
Source: Business Standard
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