The government of Andhra Pradesh is planning to support Rashtriya Ispat Nigam Limited (RINL), a state-run steel producer, by sourcing construction-grade steel from them for a program aimed at constructing 3 million residential housing units in urban and rural areas. The government has allocated a budget of approximately $1.9 billion for the current fiscal year to fund these housing units and intends to utilize RINL’s products for the project. The goal is to create additional demand for RINL’s steel and discourage the federal government from privatizing RINL’s 7.3 million steel mill in Vishakhapatnam, a decision opposed by the state government.
The state government has highlighted that RINL has been unable to fully utilize its 7.3 million capacity, with one blast furnace remaining idle for over a year. In a bid to address its financial challenges, RINL has issued an expression of interest (EoI), seeking barter participation from interested parties who can provide working capital in exchange for RINL’s steel products.
Unlike other mills in the country, RINL has not been allocated any captive iron ore mine and thus relies on purchasing raw materials from external sources. This dependence on merchant procurement of raw materials has made its operations financially unviable.
Through the increased demand for its construction-grade steel, RINL aims to generate additional funds, improve its financial viability, and dissuade the central government from privatizing the company’s assets to private investors.