Why SAIL cannot be a mega PSU

The government's ambitious plan to make Steel Authority of India Limited a mega PSU may hit a roadblock with several smaller PSUs under the Steel Ministry expressing unwillingness to merge with the steel behemoth.

"Maharashtra Elektrosmelt Ltd, a subsidiary of SAIL, wants to be merged with the parent company but SAIL wants Manganese Ore and Iron Ltd too to be amalgamated with it, but MOIL does not want that to happen.

SAIL wants Rashtriya Ispat Nigam Ltd under its umbrella but RINL does not want... this is the situation we are facing," Union Steel Minister Ram Vilas Paswan said.

"We also have to keep states' interests in mind, like Andhra Pradesh does not want RINL to be merged with SAIL, as they feel that supply of steel in the state may suffer," he said, adding that "we are looking into the issues and take a final decision soon.

He, however, emphasised that the Centre favoured the mergers with a view to make SAIL a truly international standard steel producer.

SAIL has already embarked upon its own expansion plan, envisaging an investment of over Rs 34,000 crore (Rs 340 billion) by 2012 to augment its production capacity to over 20 million tonnes.

Paswan said that in the proposed 110 million tonnes capacity till 2020, as per the New Steel Policy, SAIL along with other PSUs would continue to contribute one-third of the total capacity while two-third would come from the private producers.