Burying relics of Raj, SAIL completes Burnpur modernisation

Steel Authority of India (SAIL) is set to restart production at the revamped Burnpur plant in West Bengal, country's second-oldest steel plant, next month.

The move comes after a delay of four years and consequent cost overruns.

The state-owned steel major has initiated on Sunday operations of what is called the first basic oxygen furnace, paving the way for starting production from the new blast furnace next month, SAIL said on Wednesday.

"This event marks the commencement of modern steel making in IISCO Steel Plant. With the operationalisation of the new blast furnace, the integrated operations would start in the state-of-the-art 2.5 million tonne a year plant constructed at an investment of around Rs 17,000 crore," a statement from the company said.

The investment of Rs 17,000 crore includes a cost overrun of about Rs 3,000 crore suffered due to delays in implementing the project, which involved modernising the old plant of IISCO or Indian Iron and Steel Factory, which in its earlier avatar as Bengal Iron Works pioneered iron making in India in 1875 at Kulti.

A sick IISCO was taken over and merged with SAIL in 2006, kicking off a modernisation programme envisaged at a cost of Rs 10,000 crore planned to be completed by 2010.

But then the project got delayed and deadline pushed back every year forcing the Standing Committee on Coal and Steel report tabled in Parliament in 2013 to severely criticise SAIL authorities for continued delay.

In reply SAIL chairman C S Verma maintained that the delay happened due to a faulty soil study carried out by consultants as the presence of boulders and molten material beneath the surface, probably relics of the previous steel making facilities, hampered building the foundation of new plant.

In fact, SAIL's expansion and modernisation projects across its five integrated steel plants at Bhilai, Bokaro, Rourkela, Durgapur and Burnpur have suffered years of delays and cost overruns, entailing a final outlay of about Rs 70,000 crore resulting in a stagnant output for year at around 14.5 million tonne (mt) of hot metal, 13.6 mt of crude steel and 12.8 mt of saleable steel, as noted by a parliamentary panel last year.

Now all that is set to end with the expansion project finally starting to bear fruit from this year, feels brokerage firm Nirmal Bang Securities.

"With commencement of integrated operations in Burnpur, SAIL's hot metal capacity would increase to around 19.5 mt a year," SAIL chairman said in the annual report.

The modernisation and expansion project, after completed, would raise production capacity of hot metal from 14.4 mt to 23.5 mt a year.

"Orders for about Rs 59,288 crore have been placed till March and a capital expenditure of Rs 53,270 crore has been made under this programme. Facilities of about Rs 20,000 crore have been already operationalised including facilities at Salem, raw material handling plant, sinter plant and wire rod mill at IISCO and Sinter Plant-3 at Rourkela," the report said.