In a bid to throw a lifeline to state-run steel producer Rashtriya Ispat Nigam Limited (RINL), located in the state, the government of Andhra Pradesh is planning to source construction grade steel from it for a program to build 3 million urban and rural residential housing units, government sources said on Wednesday, July 12.
The government has budgeted a spending estimated at $1.9 billion in the current fiscal to rural and urban housing units and use products of RINL for the project.
The sources said that by generating additional demand for RINL, it expected to force the federal government to abandon privatization of RINL’s 7.3 million steel mill located in southern port town of Vishakhapatnam, which was being opposed by the state government.
It was pointed out by the state government, that RINL had been unable to fully utilize its 7.3 million capacity and one blast furnace had been idled for more than a year. The cash strapped steel producer has also issued an expression of interest (EoI) seeking barter participation from parties to provide working capital in lieu of which RINL will offer its steel products.
RINL was also the only mill in the country which had not been allocated any captive iron ore mine and had to depend on merchant procurement of the raw material leading to unviable operations.
Government sources said that by generating incremental demand for its construction grade steel, RINL will be able to generate additional funds for its operation, improve viability and prompt the central government to abort handing over the assets to private investors.