Tpe-Iisco Joint Venture Deadline Gets Extension

The ministry of steel, on a request from Russian firm Tyzhpromexport (TPE), has extended the February deadline for the finalisation of the Rs 800 crore TPE joint venture proposal for Indian Iron and Steel Co Ltd (Iisco). The ministry has asked TPE to reach a decision by March 31, 2000, when Iisco's revival plan is scheduled for hearing before the Board for Industrial and Financial Reconstruction (BIFR).

If TPE fails to deliver by March 31 the ministry would have to place an alternative plan for reviving Iisco before the BIFR.

Senior steel ministry sources said, "TPE has been unable to reach a final decision so far due to internal political problems in Russia. However, since they have sought an extension of the deadline, the steel ministry is prepared to wait, but only till March 31. TPE would actually have to come up with an answer before March 31, since the BIFR hearing is scheduled on that date."

 

Steel minister Dilip Ray had announced in November 1999 that the government would give TPE till February-end to finalise its joint venture proposal, failing which the government would explore other options.

The TPE proposal envisages bringing in Rs 800 crore either as equity or loan, using the rupee-rouble escrow account.

Last year, Steel Authority of India Ltd's (SAIL) Rs 2107 crore revival plan for Iisco, which envisaged the participation of TPE as an equity partner, was sent to the Russian government for clearance.

This year, TPE submitted a revised version of the proposal for vetting by the government of India, which envisages majority participation by TPE and a total investment of Rs 800 crore. Under the new plan, Iisco's steelmaking capacity is proposed to be raised from 0.3 million tonne to 0.6 million tonne. While the Indian government has approved the revised proposal, the Russian side is yet to come through with their clearances.

"If the Russian side does not come through with a decision even by March, the only way TPE would get a further extension is if the BIFR extends its date of hearing", said steel ministry sources.