Learning the right lessons

Bhilai tragedy raises governance issues

A gas leak at the Bhilai steel plant of Steel Authority of India Limited (SAIL), which killed as many as six people last Thursday, is a tragedy that should serve as a wake-up call. The usual inquiries have been ordered, which will be followed by reports that will eventually fix responsibility - particularly as to whether maintenance and inspection schedules were properly followed. Initial reports indicate that there was a leak in a water main that led to flooding. In the absence of water pressure, lethal gases like carbon monoxide and methane from the blast furnace pushed into the flooded area, felling those who were trying the fix the leak. Of the six people who died, two are deputy general managers, which indicates that senior officials were quick to act. At the same time, it suggests that they may not have taken the necessary safety precautions to guard against gas leaks.

The Bhilai steel plant is the largest producer among SAIL's five integrated steel plants (in 2013-14, it produced 4.6 million tonnes of saleable steel out of SAIL's total 12.9 million tonnes) and is in many ways highly rated. The plant is set for a sharp rise in its output to 6.6 million tonnes after the current expansion programme of SAIL takes its overall output to 20.2 million tonnes. In 2011, the Bhilai steel plant's mines division won the industry's Suraksha Puraskar, a safety award for zero accident. When the good record of a leader is blotched, there is all the more reason to look at not only safety aspects but also overall performance and examine if the governance structure can be changed so as to keep pace with sharply growing operations in the future.

SAIL, along with the rest of the industry, made a recovery last year. Its annual output rose to 12.9 million tonnes of saleable steel from 12.4 million tonnes in the previous two years. However, it has a distance to travel in terms of modernisation. The continuous casting process covers 72 per cent - not 100 per cent - of output. Things can change dramatically only when there is proper planning for the future. In 2012-13, Tata Steel's capacity was around half of SAIL's 12.8 million tonnes of crude steel. But if brown and greenfield projects that are being currently planned materialise, SAIL will be at 27 million tonnes and Tata Steel at 33 million tonnes. The share of public sector steel output has steadily declined, from 32 per cent in 2007-08 to 22 per cent in 2011-12. The issue is not whether the public sector should catch up; the point is whether it is necessary to keep steel-making in the public sector, where it legitimately started after Independence. Under public ownership, governance often suffers. The head of SAIL, for example, for two years until recently also headed National Mineral Development Corporation. How he could do justice to either job is a question the new government needs to ask as it addresses the issue of safety and plans the growth of India's steel industry, which is a tenth in size of China's.