AP govt urged to oppose Centre’s privatisation of Vizag steel plant

Visakhapatnam: Former Energy Secretary EAS Sarma has urged the Andhra Pradesh government to question the Centre’s privatisation policy in general and privatisation of Visakhapatnam steel plant in particular.

In a letter addressed to Chief Minister YS Jaganmohan Reddy here on Monday, he noted that despite the AP government writing to the Centre to stop privatisation of VSP, the Centre appeared to be moving fast on disinvesting its 100 per cent equity share in the plant.

“I am not sure whether the State is aware of the way the Centre is moving fast towards privatising VSP. The Centre has signed a MoU with POSCO to allow that company to be an important shareholder in VSP.

Meanwhile, the Adani Group has acquired a dominant share of the Gangavaram Port, which is the gateway to VSP. I felt surprised that the State government should also fall in line meekly and dole out its own 11% share in Gangavaram Port without going through the competitive bidding route as it ought to have. One gets the impression that the State has joined hands with the Centre in creating an environment conducive to privatisation of VSP against the people’s wishes. If this is correct, what the State is doing is highly objectionable,” he remarked.

Dr. Sarma pointed out that privatisation of VSP would introduce uncertainty in the future of more than 17,000 employees, including more than 7,000 employees belonging to the SCs/STs/OBCs. In addition, it would permanently close the door for reservations for the SCs/STs/OBCs. which was a matter that should cause a serious concern to the State government which, in his view, should resist privatisation without any hesitation

Recalling that it was as a result of a persistent public agitation that took place in north AP that the Centre was originally forced to decide on setting up a steel plant in the public sector at Visakhapatnam in the late 1960s and the early seventies, he said that the State that acquired more than 20,000 acres of land for the steel plant under the erstwhile land acquisition law of 1894.

Under Section 3(f)(iv) of that Act, private land could be acquired only for a “public purpose” which was defined as, among others, “for a corporation owned or controlled by the State”. That was the understanding given by the State to the original land owners who put up stiff resistance to forcible acquisition of their lands. Consequently, the Centre is prohibited from transferring the ownership of the steel plant now to a private company. Such a unilateral decision of the Centre to privatise VSP would also implicitly constitute a breach of the public trust, he argued, and felt that the State should make this abundantly clear to the Centre.

In the normal course, since the State has as much of a stake as the Centre, if not more, in the VSP, the Centre ought to have consulted the State before taking such a precipitate decision. Considering the background of the establishment of the VSP, the matter ought to have been discussed both in the Parliament and in the State legislature.

By not complying with this basic norm of a democratic way of taking such an important decision, the Centre has blatantly violated the spirit of federalism that lies at the core of the basic structure of the Constitution. Keeping in view the long-term implications of this, the State should question the Centre’s approach, Dr. Sarma opined.

Since it was the State that invoked its authority under the 1894 land acquisition Act to acquire the lands, and since it was the original land owners who were forced to part with their lands ostensibly for a “public purpose”, the lands in question should strictly revert to the State and the land owners when a private company takes over VSP and both the State and the farmers should be fully compensated for it, he felt.

In this connection, Dr. Sarma referred to the note of the claim put forward by the Tamil Nadu Finance Minister at a recent Finance Ministers’ meeting convened by the union Finance Minister that “during the privatisation of such organisations, the State should justly be compensated for the land either through payment of the land cost at the current market value or through an equivalent equity stake in the new entity.

AP government should likewise demand that the Centre should compensate the State, if and when VSP is privatised, he suggested, and held that privatisation of the public sector enterprises of the Centre as well as the State were prima facie unconstitutional.

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