Visakhapatnam Steel Plant Crisis: Nine years after Telangana statehood, KCR again flummoxes Andhra politicians

Telangana CM KCR (File Photo)

On March 27, the Rashtriya Ispat Nigam Limited (RINL), the corporate entity behind the Visakhapatnam Steel Plant (VSP), put out a notice in the media inviting expressions of interest (EoI) from interested bidders for funding of working capital/ raw material requirement against supply of steel by RINL. The instant offer by Telangana Chief Minister and Bharat Rashtra Samithi (BRS)  leader K Chandrashekar Rao to bid for the EoI has triggered a churn in the political discourse in the sibling states of Andhra Pradesh and  Telangana, literally catching Andhra’s major political players off-guard.

YSRC And TDP: Nowhere To Hide

It is paradoxical that Andhra’s big political parties – the Jaganmohan Reddy-led ruling YSR Congress and the opposition TDP – are soft-pedalling the issue. They are not willing to upset the Narendra Modi government for different reasons, despite the interests of the Visakhapatnam steel plant hanging in the balance.

N Chandrababu Naidu has been extending an olive branch to the BJP after burning his fingers in his fight against PM Modi in the 2019 elections. Besides, Naidu’s party, TDP, was sharing power with the Vajpayee-led BJP government at the Centre when the proposal for the plant’s privatisation came up in a big way.

So, Naidu is disarmed for two reasons in opposing the Modi’s government’s privatisation moves. On the other hand, Jagan, facing trial in money-laundering cases, has the solitary reason of needing to be in the good books of the NDA government.  As an anti-Modi crusader since BJP’s rise in Telangana, KCR obviously tried to exploit this handicap that is hobbling Andhra politicians.

Telangana’s Seemandhra Voters

KRC’s entry in VSP’s bidding is viewed as a masterstroke. The astute leader aims at countering the popularity PM Modi enjoys and checking the resurgent BJP with a synergy of Andhra and Telangana sentiments ahead of elections due in his home state. The prospects of KCR achieving the hat-trick as a three-time CM hinges on the support of Seemandhra settler voters predominantly present in 20-25 out of 119 assembly segments in his home state.

By defending the cause of Visakhapatnam steel plant the Telangana CM will drive his point home that the NDA government is arbitrarily working against the underlying spirit of the Andhra Pradesh State Reorganisation Act, 2014. The law aimed to rebuild the truncated states of Telangana and Andhra Pradesh but KCR can use this plant and related issues to allege that the Centre is not helping in realising all the commitments enshrined in the Act.

The commitments include establishing steel plants at Bayyaram in Telangana and Kadapa in Andhra Pradesh. The Narendra Modi government dropped the steel plant proposal at Bayyaram, citing as reason the “low-grade” coal availability there.

Ignoring Visakha’s Captive Mine Need?

KCR and his son KT Rama Rao,who is also the BRS working president, are actively engaged in building a poll-eve narrative around the central ruling party’s perceived proximity to the Adani group. KTR, who also holds the industry portfolio in his father’s cabinet, in a letter to the Prime Minister, questioned the rationale behind the awarding of Bailadila iron-ore mine in Chhattisgarh to the Adani group.

Visakhapatnam steel plant is about 600 kms from Bailadila and could have benefited from being granted Bailadila as a captive mine, while Bayyaram (site of the proposed steel plant under the Reorganisation Act) is just 150 km away.  How could transportation of ore from Bailadila to Bayyaram and VSP be considered not technically feasible when the same facility is being extended to Adani’s company located in Gujarat’s Mundra, 1,800km away, KTR asked.

RINL, regardless of its proximity to two ports – Vizag and Gangavaram, does not have mine linkages for iron-ore and coal. As a result, the cost of coal and iron ore procurement in FY2021-22 stood at Rs 9,051.13 crore and Rs 7,213.17 crore, respectively. Raw material costs were 64 percent of the company’s expenditure during that financial year.

From FY2016 to 2018, RINL reported losses to the tune of Rs 1,604 crore, Rs 1,263 crore  and Rs 1,369 crore respectively. In FY 2020 and 2021 the company again reported losses to the tune of Rs 3,910 crore and Rs 1,012 crore.

The Plant’s Emotive Past

The sorry fate of the steel plant brings to public mind a tide of violent protests that whipped up Andhra sentiment for the steel plant at Visakhapatnam during the regime of Indira Gandhi as the Prime Minister in the mid-1960s. The  tagline of the protests was “Visakha Ukku, Andhrula Hakku” (Visakha steel plant is the right of Andhra people). Over 30 protesters were killed during the agitation, including four from the Telangana region which was part of Andhra Pradesh then.

The frenzied mobs uprooted a statue of Neelam Sanjeeva Reddy – who was a Union minister in the Indira Gandhi government then – from a public place in Vijayawada and threw it into an irrigation canal. Sanjeeva Reddy, hailing from the Rayalaseema region, was targeted by the agitators suspecting that he was acting against the locating of the plant at Visakhapatnam.

Finally, the Indira Gandhi government yielded to massive protests, and the first pylon of the Visakha Steel, as it was affectionately known, was laid in 1971.

With such a storied history and struggle to get the plant up and running, KCR will hope that it strikes an emotional chord or at least gives him the upper hand in the perception battle against BJP. Andhra politicians, caught in the crossfire, have reason to worry if the issue hots up.

Gali Nagaraja is a senior journalist, formerly associated with The Hindu, The Times of India, and Hindustan Times for over three decades. Views are personal and do not represent the stand of this publication.