New Delhi/Amaravati, Andhra Pradesh Chief Minister Y. S. Jagan Mohan Reddy met Union Petroleum, Natural Gas and Steel Minister Dharmendra Pradhan on the second day of his Delhi tour on Friday and requested him to stop the sale of Visakhapatnam Steel Plant (VSP).

Reddy appealed to Pradhan to consider the alternatives suggested by the state government earlier to revive the steel plant.

"Thirty two people have laid down their lives to set up the plant in Visakhapatnam where nearly 20,000 people are employed and thousands more are having indirect employment," he said, emphasising the importance of the steel plant to the southern state.

According to Jagan Mohan Reddy, the VSP performed well between 2002 and 2015 raking in good profits but went through a rough patch after taking loans to expand, compounded by a slump in the international market.

"The organisation fell into debt with increasing operational costs and lack of own mines," he said, highlighting that the plant is currently buying iron ore from NMDC Bailadila mines at a market price of Rs 5,260 per metric tonne (MT) of steel.

The Chief Minister said many of its competitors have captive mines for more than 60 per cent of their requirement and buy only the rest from NMDC while Steel Authority Of India Limited (SAIL) has its own captive mines with reserves of iron ore sufficient for another 200 years.

"This excess cost of iron ore has cost implications of more than Rs 3,472 crore for the plant and it is essential to have an allotment of captive mines in order to overcome the cost disadvantage," said Reddy asking for the allotment of captive mines in Odisha which will help in reviving VSP.

The VSP is burdened with a debt of Rs 22,000 crore which is being repaid at a high interest rate of 14 per cent, prompting Reddy to suggest converting these loans into equity and listing the entity on the stock exchange.

Reddy said that these steps and monetising VSP's 19,700 acre of land during this crisis would help in saving the steel plant.

The Chief Minister told Dharmendra Pradhan that the steel plant did yeoman service during the second wave of coronavirus by supplying more than 7,000 MT of oxygen, saving precious lives.

Similarly, he asked for reducing the viability gap funding (VGF) of Rs 975 crore per year from the state for the Kakinada Petro Complex promised as part of united Andhra Pradesh bifurcation.

Reddy said the detailed project reports (DPR) have been prepared for the special economic zone project by Hindustan Petroleum Corporation Limited (HPCL) and GAIL for the petro complex of 1 million metric ton at a cost of Rs 32,900 crore.

He informed Pradhan that members for the working group on behalf of the state government for the project have already been nominated and asked the Centre to issue immediate directions to start the project.

Reacting to the Chief Minister's requests, Pradhan said the petro complex will definitely be set up in Andhra Pradesh.

He told Reddy that a meeting will be scheduled next week with the Chief Secretary and other petroleum department officials to finalise the procedures.