Ex-Top Bureaucrat Questions Plan to Lease Vizag Steel Land to Adani Group

News reports about the Visakhapatnam Steel Plant (VSP), the integrated steel plants of the Rashtriya Ispat Nigam Limited (RINL), negotiating with Adani Group to lease out 1,000 acres for the conglomerate’s Gangavaram Port Limited have surfaced.

Former secretary to the Union government and Andhra Pradesh tribal welfare commissioner EAS Sarma has written a second letter to Union steel secretary Nagendra Nath Sinha raising concern at “RINL (Vizag Steel) trying to lease out 1,000 acres of its land to Adani-owned Gangavaram Port”.

“RINL cannot alienate the land under its occupation as it was acquired decades ago under the erstwhile land acquisition legislation, in which there was no provision to alienate it to a private company,” Sarma wrote referring to his first letter.

In the first letter, Sarma had written that the “lands in the possession of VSP are highly valuable. At today’s market price, the value of 1,000 acres would be far in excess of Rs 20,000 crore” … the proposed Adani deal will constrain its growth”.

Mentioning that “VSP was forced to part with around 2,000 acres valued at that time at more than Rs 20,000 crores to the earlier promoter of Gangavaram Port, another private group, from whom the Adani Group acquired the port through a non-transparent deal, especially the residual equity share of about 11% of the state government without any competitive bidding, he wrote: “In other words, the Adani Group has already been the recipient of undue largesse from both the Central and the state governments, which was against the public interest.”

Moreover, such valuable public land “cannot be alienated through a non-transparent procedure as it would then violate the doctrine of public trust,” Sarma wrote in the second letter.

“Further, I pointed out that had the Steel Ministry helped RINL to get a captive iron ore mine of its own, it would have turned into a profitable company, making it imprudent to subject it to privatisation as is being contemplated now,” he added.

However, replying to Sarma’s first letter, Sinha wrote: “Ministry is not aware of any proposal to lease out land to Gangavaram Ports.”

Sinha also claimed that the ministry has been “supporting the RINL in its endeavour to acquire iron ore mines. However, as you would be aware that mines is a state subject, RINL’s efforts have not borne fruit so far. It is also submitted for your kind consideration that any enterprise, whether CPSE or otherwise, is an entity by itself and must exist on its own merits”.

Sarma wrote back that while he feels happy that the ministry “has had  no hand in any proposal that involves RINL’s lands being alienated to a private company, I hope that RINL’s management takes note of my concerns and desists from leasing out its lands to any private company”.

“Such a move would be prima facie illegal,” Sarma wrote.

Regarding the allotment of an iron ore mine to RINL, Sarma wrote that states “have little say in allotting iron ore mines”

“It is your [Steel Ministry] counterparts, namely, DEEPAM and the Mines Ministry that decide on it. Considering that the Union functions on the basis of collective responsibility, I do not find it a convincing stand that your ministry, which is a part of the Central government, has no role to play,” Sarma wrote unconvinced by Sinha’s reply.

Referring to “the sweeping, regressive contents of DPE’s disinvestment policy guidelines of December 13, 2023”, Sarma wrote; “To say that RINL has any effective functional autonomy as a CPSE may not be entirely correct.”

The government is planning to disinvest RINL. Therefore, whatever the RINL does “is viewed by the public as at the instance of your ministry and DIPAM. I still hope that your ministry will do everything to strengthen RINL so as to continue it as a CPSE”, Sarma added.