Is Vizag Steel being made deliberately sick?

For the people of Andhra Pradesh, the Visakhapatnam Steel Plant (VSP) is more than a factory — it’s a symbol of pride and sacrifice.

It was founded in 1971 after a prolonged agitation in the 1960s that claimed more than 30 lives. No wonder every political party has opposed attempts to privatise this state-owned unit, which employs around 15,000 permanent and 20,000 contract workers, while indirectly supporting over 65,000 people.

Even as the ruling Telugu Desam Party maintains that it is committed to the revival of the loss-making PSU, the fear is that the NDA government is quietly proceeding with plans to privatise the steel plant with the tacit consent of chief minister N. Chandrababu Naidu.

The recent move to invite tenders from private firms for a phased takeover of the operation and maintenance of 44 units, including 34 critical ones, set alarm bells ringing among employees, trade unions and opposition parties. All have rallied together under the banner of the Visakha Ukku Parirakshana Porata Committee to oppose what they see as a deliberate step toward the eventual privatisation of India’s first and largest shore-based public sector steel plant.

Although the Rs 11,400 crore package approved by the Union cabinet in January 2025 was touted as a big boost to bail out the ailing unit, no funds have been allocated for procuring raw material or improving capacity utilisation.

Already, 1,600 permanent workers have been forced to opt for voluntary retirement schemes, and over 5,000 contract workers have been illegally dismissed, said J. Ayodhya Ram, vice-president of the Steel Workers Federation of India (SWFI).

In 2021, the Centre had announced a 100 per cent strategic sale of VSP. Resistance to the idea came from all quarters. Every party in the state swore to save the steel plant from going into private hands.

A key reason for ongoing losses is the lack of captive iron ore mines owned and operated by the steel plants. In the absence of these, VSP is forced to buy ore from the National Mineral Development Corporation (NMDC), escalating production costs. For years, trade unions have been agitating for the allocation of captive mines, which they claim will ensure profits for the plant by dramatically reducing costs.

Today, VSP requires 12 to 13 million tonnes of iron ore annually. To put it in context, SAIL secures 30 million tonnes annually for Rs 18,500 crore, while VSP, needing less than half, spends nearly Rs 15,000 crore. Union leaders see this as a deliberate attempt to undermine the unit.