Sathavahana Ispat Ltd (SIL), has decided to split its modernization and expansion project into three phases for want of funds. The company has also put on hold its project for the manufacture of metallurgical coke with cogeneration of power. This follows the insistence of lending financial institutions for a power purchase agreement with a transmission utility, which the company has yet to sign.

According to SIL Chairman, Mr. Ghulam Ghouse, the company has already completed the first phase of the modernisation, which included setting up of a furnace of 350 m³ per day capacity, replacing the old 250 m³ per day furnace.

SIL manufactures pig iron at its facility located at Haresamudram in Ananthapur district of Andhra Pradesh. The unit was shut down from October 2002 to January 2003 for implementing Phase I of the project.

The company is in the process of achieving financial closure for the second and third phase of the project that involves setting up of auxiliary facilities.

The proposal for setting up of project for manufacture of metallurgical coke with co-generation of power was still in the evaluation stage. The company has not yet succeeded in finalizing its power purchase agreement (PPA) with Karnataka Power Transmission Corporation Ltd (KPTCL).

Prospects for the iron and steel industry are bright in view of large export orders being received from China and other developing economies. However, rising prices of metallurgical coke have exerted pressure on the viability of companies that do not have access to captive sources of metallurgical coke.