October 07, 2008

Orissa delaying merger of NINL and SAIL

SNS reported that Orissa government is deliberately dilly dallying over the proposal to merge Neelachal Ispat Nigam Limited with Steel Authority of India Limited despite the fact that SAIL had drawn up elaborate plans to invest heavily in the unit.

Mr Ramachandra Khuntia chief of INTUC and also Congress MP alleged that "The merger would transfer NINL from a pig iron unit to an integrated steel plant. But for some strange reasons the state government is vacillating, perhaps keeping private steel maker’s interests in mind."

Mr Khuntia said that "The plant was commissioned in 2002 and MMTC held its marketing right taking a commission of 3% for supply of raw material and another 3% for selling of finished products. It has already earned over INR 200 crore as commission. The proposal had been mooted since long and the IBDI appointed to undertake the valuation. Mr Naveen Patnaik claims to have attracted mega projects and investment in the steel sector but in this case too the government has delayed matters effecting investment in NINL."

Mr Pratap Kumar Jena general secretary of the Shramik Sangha said that "The state was reportedly bargaining on a 1:2 ratio or at least two SAIL shares against each NINL share." Mr Jena informed that on April 9th 2008 the concerned parties are to meet to discuss the merger proposal again. Hopefully the state will agree to the merger and terms that are set.

It may be noted that SAIL has plans to invest INR 12,300 crore to make NINL a 3.5 million tonne steel plant. NINL is a 49.76:26.29 JV of MMTC and state government.