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Journalism of Courage
New Delhi, jun 28: Steel Authority of India Ltd (SAIL) has opted out of the proposed 574 mw power project at Bhilai in joint venture with L&T and PSEG Global of the US as the Madhya Pradesh government failed to provide escrow commitment to the project.
"This decision has been taken as the financial closure of the project was held up for want of escrow commitment from the state government and Madhya Pradesh State Electricity Board (MPSEB)," Sail sources told PTI.
The decision has been taken after five years of the incorporation of the joint venture company, Bhilai Power Supply Company Ltd (BPSCL). Meanwhile, Sail has approached National Thermal Power Corporation (NTPC) to form a joint venture for expansion and upgradation of the existing Sail’s 74 mw captive power plant at Bhilai to add another 120 mw at an estimated cost Rs 500 crore, they said.
Sail has also planned to transfer its other captive power plants at Bokaro, Durgapur and Rourkela under new Sail’s subsidiary for power plants, Sail Power Supply Company Ltd (SPSCL), to bring the management of entire power needs of Sail under single unit.
Sources said that bringing all units under a single umbrella would help in generating much-needed funds and power generation thereby reducing dependence on state grids.
The Sail board which met here recently approved the proposal of expansion and modernisation of the power plant at Bhilai in partnership with NTPC. However, Sail sources refused to comment on whether NTPC would agree to the joint venture.
In line with the mandate given by the government to Sail to restructure its assets and focus on core activities, Sail has been trying to sell its stake in three captive plants totalling 542 mw to NTPC to avoid labour problems.
SAIL had invited bids from both domestic as well as global investors for buying stake in the power plants. Enron and BSES had evinced interest, but employees’ unions resisted handing over the management control to private power companies.
SAIL has also proposed disinvestment in non-core areas such as power plants, alloy, special steel and fertilisers. SAIL is disinvesting its stake in subsidiaries including Iisco, Salem Steel Plant and Visveswaraya Iron and Steel Ltd at Bhadrawati and Alloy Steel Plant at Durgapur. These divestments will be completed over a three-year period.
Regarding Salem Steel, SAIL has invited bids through a global tender. Those in the race include SMS Demag of Germany, British Steel subsidiary Avesta Sheffield, Jindal Strips, Tata Steel and Shah Alloys.
SAIL had received government nod to divest its stake in seven ventures as part of restructuring package in February which also waived government and steel development fund loans to the company to the tune of about Rs 5,454 crore besides other financial assistance.
SAIL reported a 9 per cent increase in its income to Rs 16,250.16 crore in 1999-2000 from Rs 14,963.18 crore in the previous year. The company recorded a net loss of Rs 1,720 crore for the whole year ended March 2000, lower than the net loss for the three quarters in 1999-2000 at Rs 2,065 crore.
4 firms shortliested for JV
NEW DELHI: BOC India, Praxair, Inox Air Products and Messers Germany have been shortlisted for a proposed joint venture with Steel Authority of India’s subsidiary Bhilai Oxygen Ltd.
These four companies have sent the information memorandum relating to the oxygen plant on June 16. Subsequently, these companies are expected to start the due diligence exercise soon. SBI Caps has been appointed as the merchant banker for the purpose. The merchant banker had received expression of interest from four companies in response to a global tender floated in April 2000 for a strategic alliance partner.
