The Telangana government will need a minimum of `7,000 crore investment to establish a steel factory as proposed at Bayyaram in Khammam district. According to a preliminary estimate of the officials, who were preparing a base paper for the proposed steel factory, the investment required to start a steel factory with one million tonne production capacity will be around `5,000 crore and, if other expenses are included, the cost will rise to Rs 7,000 crore.
“It will not be economically viable if the factory has a production capacity less than one million tonnes,” a senior official said. If the capacity of the steel factory is to be three million tonnes, the investment required will be around `21,000 crore.
The state government constituted a committee of officials to suggest the plans for establishing the Bayyaram steel factory after the central government had backed out.Setting up of a steel factory at Bayyaram was a commitment the central government had made in the AP Reorganisation Act, 2014. Now, the state government has decided to start the steel factory on its own with the help of private players. The officials suggested that the PPP mode would be a better option for the state government to set up the factory.
“The state government too should extend help to the proposed steel factory to make it viable,” official sources said.
As the quality of iron ore available in the area is not very good, the public sector undertaking Steel Authority of India Limited (SAIL) or any private steel factory did not evince interest in the Bayyaram project. The official sources, however, said that they would give the first preliminary report on 12 basic issues concerning the Bayyaram plant, to the industries department.
“We will submit a preliminary report. Later, the technical feasibility and financial viability studies will be carried out before going ahead with the plan to start the steel factory,” a senior official said.