The Andhra Pradesh government has written to the Union Steel Ministry seeking financial support of ₹750 crore towards building infrastructure and improving connectivity around its proposed ₹8,800 crore greenfield steel plant in the YSR district of the state. The integrated steel plant plans, initially rejected by SAIL, are now being taken forward by Sajjan Jindal’s JSW Group, the Andhra government wrote in a letter accessed by businessline.

The state government has also sought help from the Centre to grant iron ore linkages for the steel plant and allocate such mines to the state’s agency, AP Mineral Development Corporation Ltd.

According to the letter, ₹750 crore will be spent over a two years period and across categories like a four-lane access road connecting the plant with a national highway at a proposed cost of ₹110 crore, water – supply connection at a cost of ₹155 crore, a double circuit transmission line at around ₹85 crore and a railway connectivity (of around 12 km) from Muddanuru station costing the remaining ₹400 crore.

“Along with the infrastructure, the availability of iron ore from the mines nearest to the steel plant shall greatly aid the implementation and operation of steel plant,” the letter by the state’s Chief Secretary reads.

To be built in phases

It has been mentioned in the letter that the setting up of a steel plant was one of the key assurances in the Andhra Pradesh Reorganization Act of 2014, when the state was bifurcated into two – Telangana and Andhra Pradesh. However, the Steel Authority of India Ltd (SAIL) had initially submitted a feasibility report and mentioned that the project was not viable.

In November 2019, the government of Andhra Pradesh constituted the YSR Steel Corporation Ltd, and it was decided to set up the plant on a PPP basis.

After the state government identified 3,500 acres of land and JSW Group submitted a proposal to set up the steel mill using its own resources (thereby obviating the need to use the state’s financial resources) at a proposed cost of ₹8,800 crore.

JSW will build the steel plant in two phases – the first one of ₹5,500 crore for one million tonne per annum, and around ₹3,300 crore will be spent in the second phase for an additional one million tonne per annum capacity. While Phase 1 is expected to be completed in 36 months, Phase 2 will be completed in 24 months.

Commitment by Andhra govt

According to the letter, the Andhra government will provide JSW with 1,100 acres of land on a long-term basis for 33 years and subsequently renewable for up to 99 years. The state government will also help develop the connecting infrastructure.

Apart from seeking committed financial aid and other raw material linkages (like iron-ore mines), the state government is also seeking an extension of the Central scheme of ‘Purvodaya’ to the YSR district, which falls under southern Andhra Pradesh. The scheme aims to develop steel hubs in eastern Indian states like West Bengal, Odisha and Jharkhand, apart from the central Indian state of Chhattisgarh and northern parts of Andhra.

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