| Subject: |
Finance Ministry set to bail out steel projects stalled for lack of funds |
|
NEW DELHI: The finance ministry is set to make efforts to bail out steel projects that are stuck for want of funds, following a meeting earlier this week with embattled companies and other stakeholders in the sector to find a way to complete stalled projects that could contribute to bad loans.
"The steel industry has shared its concerns. Our attempt will be to see through those projects where issues can be resolved easily," a senior official said.
The Reserve Bank of India has warned of a possible spike in nonperforming assets in the sector as heavily indebted steel companies have been hit hard by low demand, delay in projects and competition from cheaper imports.
The meeting was part of the finance ministry's initiative to push those projects which are stalled due to paucity of funds. It was attended by most big companies in the sector, officials of mining and steel ministries, and lenders.
Finance Minister Arun Jaitley had last month said the government will create a list of such projects. "Both the secretary, financial services, and if necessary at my level, we will be calling for a meeting of the representatives of the state governments, those projects and concerned departments, over the next few days and try to resolve the issues," Jaitley had said.
RBI last week said in its Financial Stability Report that banks face a problem with the overleveraged steel industry that has been hard put to make a profit.
"As on date, five out of the top 10 private steel producing companies are under severe stress on account of delayed implementation of their projects due to land acquisition and environmental clearances among other factors," the report said. According to an industry representative, who attended the meeting, the government may also look at reducing import duty on coking coal and increasing import duty on flat products 5%.
"On these issues there will be an inter-ministerial discussion, which may be held in the next few days," the official cited earlier said. The finance minister is likely to meet steel and heavy industries ministers on the issue of duty revision, he said. Last month, the government had raised the import duty on flat steel products to 10% from 7.5%. In his budget speech for the current fiscal, Jaitley had said that the cap on import duty would be raised from 10% to 15%.
Heavy industries minister Anant Geete had last week said he would soon meet the finance minister and inform him about the tough conditions being faced by steel industry due to cheap imports. "Then it is for the finance minister to take a decision on this issue," he had said.
Another industry official said that the finance ministry will also take up the issue with states such as Karnataka, Jharkhand and Goa and the mines ministry to expedite iron ore mines auction and also give the first right to end user plants instead of commercial miners.
Source : economictimes.indiatimes.com
|