The ultra mega steel project proposed in Odisha has got a fresh twist with the Union ministry of steel proposing maharatna firm Steel Authority of India Ltd (SAIL) to be the equity partner in the project.

If the Centre's latest move falls in place, SAIL is most likely to replace its smaller rival Rashtriya Ispat Nigam Ltd (RINL) as the equity partner.

"Since RINL is not showing the desired interest in the ultra mega steel project, the steel ministry has proposed that SAIL should be the equity partner. The ministry has emphasised that the mega steel project be implemented in Odisha as per the Chattisgarh model where SAIL and National Mineral Development Corporation (NMDC) hold equity in the special purpose vehicle (SPV) to be formed for the project", said a government official. The proposed ultra mega steel project (UMSP) in the state has not made the desired headway and has instead, been dogged by frequent changes proposed in the equity structure of SPV.

The UMSP was originally supposed to be developed as 50:50 joint venture between NMDC and state run miner Odisha Mining Corporation (OMC). Later, RINL evinced interest to pick up stake in the SPV to be formed for the project. But the lack of consensus between RINL and NMDC on the shareholding pattern pushed the project to delay.

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 The site was earlier identified for the 12 million tonne steel plant by ArcelorMittal, but the company had later withdrawn from the project.

For ArcelorMittal's steel project, Odisha Industrial Infrastructure Development Corporation (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.

 

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