With steel prices going up and the government approving a follow-on public offer (FPO) of Steel Authority of India, the domestic steel sector is seeing a spurt in activity. In an interview with Nayanima Basu, Steel Minister Virbhadra Singh says the recent hike in steel prices is based on speculation and needs to be controlled, even as he makes a case for faster clearances for new projects. Edited Excerpts:
Now that the CCEA has given the green signal to SAIL’s disinvestment, when is the issue likely? Also, when will the new chairman be appointed?
It will be in two tranches and both will take place this financial year. This will happen in tranches of 10 per cent, each comprising sale of government and fresh equity. The FPO will hit the market as soon as the process is followed according to Sebi (Securities and Exchange Board of India) guidelines. We expect to get around Rs 16,000 crore, of which Rs 8,000 crore will go to the government and the remaining to the company. Now that the CCEA approval has come, it is for the company, the Department of Disinvestment and Sebi to make the next move.
As far as appointing a chairman is concerned, the public enterprises selection board has made certain recommendations and a decision will be taken before May.
What are your recommendations for the Mines and Minerals Development and Regulations Bill and when is it expected?
We have made our stance clear to the Ministry of Mines. We want the final authority to allot mines to rest with the Union government so that optimum use of natural resources takes place in the country as a whole, though revenues should go to state governments. At present, a lot of delays are taking place and there are so many hurdles that companies face. The entire process has to be reviewed. We have clearly stated this to them (mines ministry). What shape it takes depends on them. There is no question of any difference of opinion on this with the mines ministry. The existing practice is: First, the application comes to the Centre, which gives its in-principle approval, after which it goes to the state for a formal approval. They forward it to the Centre. The process takes a lot of time and needs to be expedited. So, the authority should be with the Centre for facilitating the project at a faster pace, but in all fairness, the revenue should go to the states. I hope the new Act comes up this fiscal.
How do you think will a hike in export duty on iron ore help? What is the main bone of contention?
I am concerned on this issue both as a citizen of the country and as a steel minister. The policy should be to conserve our natural resources. Many countries are doing so. For example, China is importing iron ore and keeping deposits intact. The US is doing the same with its oil reserves. So, we should also not squander away this natural resource. It will be a waste of the resource if we export it at throwaway prices without any real benefit to the country. It is better to export finished goods. Exporters will be hurt but after all everything has to be looked at in the larger interest of the country. We have to be rational and see that we do not do anything that harms the country in the long run.
Does the ministry plan to create a regulatory body for delayed projects such as those of Posco and ArcelorMittal?
There will not be a regulatory body as such. The ministry is working as a facilitator to see that projects that are stuck for one reason or the other, mostly at the state level, are expedited. Even the prime minister is keen to see that all projects are executed as soon as possible. We are in touch with state governments and the companies. Posco has already made a commitment to set up a 12-million-tonne steel plant in Orissa while Arcelor Mittal will set up two steel plants of 12 million tonnes each in Orissa and Jharkhand. I hope these three projects start this fiscal. We will do our best to see that the hurdles are removed.
Is the government going to do something about the price hike by steel companies? Will this hamper the recovery process?
I believe steel companies need to have a relook at prices because they have to do business with responsibility. Today, steel is not a luxury item, it is a necessary item. If prices are increased without justification, it will harm projects related to housing, road construction and highways. But steel is a deregulated subject and so the government has no control over its prices. What we do exercise is moral authority. I am going to soon tell them to hold prices. The present hike in prices has taken place on the basis of a high degree of speculation. The steel industry in India should not work as a cartel. I want a more responsible stance from them.
Is the ministry looking at bringing in a new National Steel policy?
There is no proposal to bring in a new policy. It is an ever evolving policy.