Bhubaneswar : 'Tata Steel Odisha' is bearing the brunt of the delay in project execution, growing inflation and rupee depreciation, as it's Kalinganagar project cost has been increased substantially by almost 60%.
The company had signed an MoU with the government of Odisha on 17th of November 2004 to set up a 6 MnTPA integrated steel plant at Kalinganagar in Jajpur district. As per the original plan the first phase of the project with 3 MnTPA capacity was scheduled to be commissioned within 48 months from the date of the MoU i.e 2008-09 which was later extended for another 2 years to 2010-11. But due to several factors like law and order situation and land acquisition the project is running late by another 2 years. Now the company plans to commission the plant by the end of 2014.
As per the company sources almost 67% of the work has already been completed. The Greenfield plant will entirely concentrate on producing flat steel products catering to the needs of the automotive and the white goods industry.
Initially the project cost was pegged at 25000 crore which includes the cost of the two stages of the project and the 450 MW Captive Power Plant (CPP). But now the company estimates that the cost will touch Rs.40,000 crore. The company attributes several factors for this, ranging from delay in project execution to rupee depreciation for the cost overrun.
“Due to factors like delay in project execution, growing inflation, cold market conditions and now rupee depreciation the project cost has grown up to almost 40,000 crore” said Mr.Pradip Pattnaik, General Manager (Corporate Services).
Few months back the company had declared that it has successfully negotiated the financial closure of the 6 mtpa project. Some Rs. 22800 crore worth of project financing was tied up with a consortium of 21 banks and financial institutions.
“The company is importing equipments form countries like Germany, China and Japan. Due to sharp depreciation of the rupee the cost of these imports has become very costly” he said.
In November 2004 the value of one US dollar was at Rs. 45, but it has become more costly to Rs. 62 now.
-Tapan Moharana
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