SAIL Bhilai Steel Plant Expansion Of Rs 17,000 Crore Delayed: Report

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New Delhi: Even as the Steel Ministry races to complete modernisation and expansion worth Rs 61,870 crore, the process at Bhilai steel plant (BSP), the largest facility of state-run giant SAIL, has been delayed by 15 months.

BSP’s modernisation and expansion plan, which entails an investment of Rs 17,266 crore, raising steel capacity from 3.93 million tonnes per annum (MTPA) to 7 MTPA, has been delayed as SAIL had to terminate contracts twice due to “unsatisfactory performance”, sources said.

The flagship plant of the Maharatna firm is installing two rolling mills for production of high quality long rails (260 m length) and bars as well as is phasing out old and energy inefficient process routes for reducing carbon foot print and cost of production.

Initially, the programme was expected to be completed by September 2015, which was later revised to October 2016. It has now again been revised to December 2016, a 15-month delay from original completion schedule, sources said.

“BSP first hired Ratna Infra for its steel melting shop (SMS) package, which had to be terminated due to slow progress of work and fresh contract was awarded to state-run Hindustan Steelworks Construction (HSCL) HSCL at risk and cost of Ratna Infra,” they said.

However, HSCL’s contract also had to be terminated due to poor progress and this had to again be given to Simplex at risk and cost of HSCL, which is the main reason behind the delay of the modernisation and expansion programme.

When contacted on the change in contractors, a SAIL spokesperson said: “The contractors were changed because of their unsatisfactory performance.”

On the completion date of the programme, he said, “The completion of modernisation and expansion at BSP is envisaged in December 2016.”

Some of the facilities have been completed and balance facilities are under various stages of execution and all efforts are being made to complete the balance facilities progressively as per the target date, he said.

Sources also said, “The equipment erection package also had to be re-tendered as sufficient erection fronts could not be handed over within contractual completion period and a fresh contract was awarded to Essar Projects.”

“Also state-owned Heavy Engineering Corporation’s slow progress of work on installation of cranes for both equipment erection and subsequent material handling during production impacted the programme.”

SAIL is in process of enhancing its hot metal production capacity to 23.46 MTPA and crude steel to 21.04 MTPA under its current phase of expansion and modernisation which is expected to be completed by 2016-17 fiscal, ending March 2017.

The indicative investment is about Rs 61,870 crore. The cumulative expenditure until December 2015 has been Rs 61,245 crore including expenditure of Rs 4,482.83 crore during fiscal year 2015-16 till December.