Canal privatisation may push Vizag Steel Plant into the red

The Andhra Pradesh government's decision to privatise the maintenance of Yeleru canal in Visakhapatnam district may push the tottering Vizag Steel Plant into the red.

As the fund-starved state government finalises this proposal, the companies which draw water from the canal fear that exorbitant water charges would be slapped on them.

The public sector unit itself may have to shell out Rs 300 million annually for its water requirements, according to a report. Ironically, the canal was conceived to meet the requirements of Visakhaptnam besides the VSP and other industrial units.

Though the canal was commissioned in 1991, it has not been completed to date. Even route maintenance work has not been taken up ''due to paucity of funds'', forcing the VSP to spend Rs 150 million on repairs. As a result, the VSP is willing to pay only Rs 3.70 per 1,000 gallons though the government has been demanding Rs 9.50.

At present, the VSP receives only 35 to 40 million gallons per day from the canal as against the targetted 73 MGD.

According to a report, the state government plans to invite global tenders for the project. It has already approached the Bombay-based Infrastructure Leasing and Financial Services to prepare the feasibility report at the cost of Rs 4 million.