Union Minister for steel Ramvilas Paswan on Tuesday said that state-run Steel Authority of India Ltd (SAIL) is investing Rs 78,000 crore on capacity expansion. The figure is higher by 44 per cent from the earlier projected amount, even as the board of directors of the company are yet to ratify the cost over run.
Addressing a conference commemorating the PSU’s 50 years of production, Paswan said, “The government has taken a very significant initiative of nearly doubling SAIL’s production capacity to 26 million tonnes of hot metal by 2012. This would entail an investment of Rs 78,000 crore.” The PSU’s earlier projection on capital expenditure for the said expansion was Rs 54,000 crore. SAIL produces 14.2 million tonnes of steel and is country’s largest steelmaker.
While it was not clear how the extra capital would be generated, an official in the ministry of steel said that getting an approval from the board was just a formality.
“Till the very recent past, cost of equipment was rising exponentially which meant that overall cost of expansion also went up,” the official who did not want to be named, said. “It is not something that plagued SAIL alone as all companies were facing this problem.”
The PSU however, said that the figure was not final and is likely to go down in view of the downturn. “The scenario has changed drastically now with equipment suppliers desperate for stocks to be lifted. We are under negotiations for lowering the price,” he said.