NMDC NSE 0.74 % ‘s move to invite bids for operation and maintenance (O&M) of its upcoming Rs 15,000 crore steel plant at Nagarnar in Chhattisgarh has created a buzz in the industry, since O&M of an integrated 3 million tonne steel plant by a third party contractor is unheard of in the steel industry, globally.
Vadim Infrastructure, Lucky Minerals, Quenn Corporation, Sangha, Chennai Radha Engineering are among the ten firms that have entered the fray. Other bidders include Deloitte, MECON and DASTUR, the latter two are known for design and consultancy of steel plants. NMDC bid document invited firms “who can render O&M services for the various installations/units of the steel plant for production of the end product, i.e., steel, for a period of three years commencing from October 2018.”
In a reply to ET’s query on the issue, NMDC said: “The Expression of Interest (EoIs) was initiated for exploring the expertise for initial years.” The company confirmed that it has received ten EoIs with deadline ending on June 26, 2018, adding that it is yet to shortlist any bidder for the job.
When asked a top official of the steel ministry, which has NMDC under its administrative control, said: “They need expertise to run the plant.” However, experts say this is something unheard of in the steel industry. “A steel plant has so far always been operated and maintained by the company that sets it up,” Malay Mukherjee, a steel industry veteran.
NMDC, 74.94% owned by the government, is the country’s single largest iron ore producer with an output of 35 MTPA from three mines of Kirandul & Bacheli complex in Bailadila, Chhattisgarh and Donimalai, Karnataka. In 2017-18 it had a turnover of Rs 11,615 crore with a profit before tax of Rs 6,179 crore. Since September 2017, it is being headed by N Baijendra Kumar, a bureaucrat of Chhattisgarh cadre, under whose leadership the company has seen a significant rise in both sales and production.
The Nagarnar plant was conceived in 2011 with the idea that NMDC’s forward integration into steel will utilise its rich reserves of iron ore and help it move up the value chain. However, the thinking in government circles subsequently changed. Plans were afoot to seek a partner for NMDC to run the plant. However, with a minority stake on offer, few players showed interest to join in.
Source: Economic Times