The programme, cleared by the Centre in 1989, was originally designed to be implemented in two phases at an estimated cost of Rs 3,954 crore.
The first phase, consisting of nine packages and some auxiliary packages to improve the raw material handling system and hot metal quality, was completed in early 1994. The second phase, consisting of 20 major packages including five global ones and stressing on technology upgradation, was inaugurated by Union steel minister B P Baishya here yesterday, nearly a year behind schedule.
The symbolic inauguration yesterday notwithstanding, the interfacing and balancing of several major modernisation facilities like the second sinter plant, basic oxygen furnace, continuous casting shops are yet to be completed. Modernisation of the second phase therefore will be complete only towards the beginning of the next financial year. The original date of commissioning was December 1995.
With this delay in implementation of the modernisation project, the eventual cost of the project is likely to touch Rs 4,400 crore, said sources in the steel plant.
Officials however maintained that the plant may not have to seek clearance from the Centre for the additional expenditure as the cost overrun was within the permissible limit of 10 per cent of the total cost. The original investment proposal included a foreign exchange component of Rs 714 crore.
The modernisation programme aims to increase the production capacity of hot metal, crude steel and saleable steel of the plant to 2 million tonnes, 1.9 million tonnes and 1.67 million tonnes from the respective levels of 1.35 million tonnes, 1.4 million tonnes and 1.208 million tonnes now.
The huge capitalisation and financing cost of the modernisation programme has affected the bottomline of the Rourkela steel plant. The plant suffered losses of Rs 56 crore in the last financial year, despite a higher turnover and gross profit compared to the previous year.
The interest and depreciation liability of the plant are likely to shoot up to Rs 400 crore from this year onwards. The huge debt servicing burden will continue to be a drain on the resources of the plant for some years, said a spokesperson of the plant. But he added that following the stabilisation of the new units, the superior technology would enable the plant to go in for higher value added products with lower energy consumption which could improve the bottomline in two to three years.
Meanwhile, allegations of large-scale irregularities in the modernisation process marred the inauguration ceremony yesterday as Union minister for food processing Dillip Ray, who belongs to this area, and the Rourkela Shramik Sangha office bearers kept away from the function in protest. The absence of Ray, who had been invited to the function as a guest speaker, was especially conspicuous as he was in the city.
Earlier, Ray had shot off a letter to his cabinet colleague Baishya drawing his attention to the poor quality of work executed with respect to the raw material handling and coal handling plant, continuous casting mill and basic oxygen furnace in the modernisation package.
He accused the plant management of irregularities in appointment, poor marketing strategy and failure to boost productivity.
Alleging that the bills of various private contractors engaged for the modernisation work had been artificially inflated, he demanded investigations into various packages of modernisation by a high-level technical committee, preferably with representatives from the CBI, and withholding of the final bill of contractors till the completion of investigations.
