The Indian government has proposed to establish a special financing agency to exclusively fund ‘ultra-mega' steel projects in the country, an official at
India's Ministry of Steel told SteelOrbis on Wednesday, March 5.
The official said that the new agency will operate similar to the existing Power Finance Corporation (PFC) which acts as a funding agency for large power plants in
India. The special financing agency will be recognized as a non-banking financial company and will be eligible to raise funds as per regulations set by the Reserve Bank of
India (RBI), he added.
The plans for a specialized financial agency for steel sector projects come in the wake of the government's decision to set up at least four ultra-mega steel plants across the country, while a financing agency will ensure that these projects do not face any financing hurdles from traditional debt-funding agencies and financial institutions.
Each of the four ultra-mega steel projects are planned to have a production capacity of 12 million mt per year, with the first one to be implemented by a joint venture of NMDC Limited, the country's largest iron ore miner, and Orissa Mining Development Corporation (OMC), a mining company operated by the provincial government of Orissa, in eastern
India.
Earlier this month, Rashtriya Ispat Nigam Limited (RINL), which operates a 6 million mt per year steel mill in the southern Indian port town of Vishakhapatnam, formally put in a proposal to
India's Steel Ministry to join the NMDC-OMC joint venture for the construction of the ultra-mega steel plant to be located in the Keonjhar district of Orissa, the official said.
The Keonjhar location had earlier been allocated to ArcelorMittal by the provincial government for construction of a steel mill, but the former pulled out of the project a few years ago.