Government Scraps Privatization of SAILs Salem Steel Plant in Tamil Nadu

In a significant development, the Indian government has announced its decision to scrap the privatisation of the Salem Steel Plant (SSP) in Tamil Nadu, which is owned by the public sector major Steel Authority of India Limited (SAIL).

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Previous Privatisation Attempts

This marks the third instance where the government has halted the privatisation of SAIL units. In 2019, the privatisation of the Durgapur-based Alloys Steels Plant (ASP) was put on hold, and in 2022, the sale of the Visvesvaraya Iron and Steel Plant (VISP) in Bhadravati, Karnataka, was called off due to a lack of interest from potential bidders.

Cabinet Approval and Expression of Interest

In 2018, the Cabinet Committee on Economic Affairs (CCEA) had approved the strategic sale of these three SAIL units. Consequently, SAIL invited global Expressions of Interest (EoIs) for the SSP on July 4, 2019.

Lack of Interest from Bidders

Despite receiving multiple EoIs and shortlisting bidders, the government encountered a lack of interest from the shortlisted bidders to proceed further with the transaction. As a result, the Government of India, with the approval of the Alternative Mechanism Empowered Group of Ministers, has decided to annul the current EoI, effectively terminating the ongoing transaction.

Impact on Disinvestment Target

The government had set a target of raising Rs 51,000 crore through CPSE disinvestment and strategic sale for the current fiscal year. However, so far, it has only been able to garner Rs 10,052 crore, indicating a significant shortfall in achieving the budgeted target.

The government's decision to scrap the privatisation of SAIL's Salem Steel Plant underscores the challenges in divesting public sector assets and meeting disinvestment targets. It remains to be seen how the government will navigate these challenges and achieve its disinvestment goals in the future.