TDP MP from Srikakulam, K Ram Mohan Naidu on Wednesday told the Union government to convert the debt burden into equity to save the Visakhapatnam Steel Plant.

The MP raised the question in Lok Sabha on the first day of the winter session and asked the Central government to save the steel plant.

The government informed the member that the debt servicing and interest payments of the Visakhapatnam Steel Plant have increased from Rs 2285 crore in 2019-20 to Rs 2895 crore in 2021-22. The government further said that the weighted average interest rate of the loans increased from 8.31 per cent in 2019-20 to 8.34 per cent in 2021-22.

The MP said that the high interest burden borne by the steel plant had undermined the profitability of the prestigious unit. He wanted the Central government to convert it into equity and save the steel plant instead of selling it.

He reminded the Central government had converted the debt into equity in 2000-2001 by then Prime Minister A B Vajpayee on the request of then chief minister N Chandrababu Naidu. The TDP MP wanted the Union government to follow suit to save the steel plant.

The MP also asked the Union government to allocate captive mines for the steel plant as it was now purchasing coal in the open competition. The market price had increased from Rs 3867.84 crore in 2019-20 to Rs 7213.17 crore in 2021-22. Similarly, the open market price of coal had increased from Rs 6521.30 crore in 2019-20 to Rs 9051.13 crore in 2021-22.

Further, this is reflected in the fact that Cost of raw materials as a percentage of total expenditure increased from 57.23 per cent in 2019-20 to 63.76 per cent in 2021-22. Hence, allocation of captive mines to the Visakhapatnam Steel Plant.