Rlys Hold Key To Success Of East Coast Steel Projects
The growth of mega steel complexes along the east coast, particularly at Gopalpur and Sukinda in Orissa, hinges on an investment of about Rs 7,000 crore in railway infrastructure in the region, according to a recent Joint Plant Committee estimate. Tata Steel (Tisco), Larsen & Toubro (L&T) and Steel Authority of India Ltd (SAIL) are some of the companies which have chalked out plans to set up steel projects in the region.
However, in the face of this investment not forthcoming from the railways or the state government, the future of upcoming steel projects in the region will depend on how efficiently investments are channelled through external sources like foreign loans or setting up of corporations by beneficiaries through equity participation. The beneficiaries of the railway connections also have the option of going in for a own-your-wagon scheme which will enable them to maintain captive circuit rakes.
The cost of additional lines including electrification has been pegged at Rs 2,300 crore. Around Rs 2,020 crore will be required for new wagons, Rs 2,680 crore for new locomotives and some miscellaneous expenses on railway setup.
According to industry sources, the biggest stumbling block facing infrastructure development in this region is lack of political initiative in mobilising funding options. The proposed Tata Steel integrated steel project in Gopalpur is a case in point. The construction of the company's 1.2 million tonne per annum capacity cold rolling complex is on hold because of zero infrastructure.
L&T is another company which is waiting in the wings with its 7 million tonne capacity steel project, also at Gopalpur. The company has already received the Orissa government's sanction for land acquisition. For the Tisco and L&T plants together, around 134 million tonne of raw materials will have to be transported annually.
The Sukhinda area has been earmarked by the ministry of steel as the site for 12 steel plants with a total projected capacity of 27.60 million tonne.
It is estimated that around 84.765 million tonne of raw materials will be dependent for transportation on rail connections. In addition to these new projects, SAIL has also projected a requirement of over 102 million tonne of raw materials over the next couple of years for crude steel production alone.
The total projected raw material demand set out for the steel sector in this region requires 68 trains per day in the Sukhinda area and about 40 in the Gopalpur area.
However, new lines have to be accompanied by wagons and locomotives to facilitate raw material movement, sources said.
The Joint Plant Committee report has pegged the total locomotive requirement at 335 while along with 13,000 wagons. ABB-9 locomotives will be the most suitable considering their high reliability, energy efficiency and low maintenance costs, the report says. Similarly, heavier wagons designed by RDSO having higher carrying capacity and axle load are ideal for carrying the huge weight of iron ore in captive circuit.