(MENAFN- KNN India)
New Delhi, Dec 26 (KNN) The Finance Ministry has dismissed a proposal from the Steel Ministry to establish a central agency for the bulk procurement of green steel, citing concerns over its necessity.
According to officials, most of the steel used in government projects is indirectly procured through contractors, rather than directly by the government, making such an agency unnecessary.
Green steel refers to steel produced through environmentally friendly methods that reduce carbon emissions, typically by replacing fossil fuels with renewable energy sources like hydrogen or wind and solar power.
The Steel Ministry had suggested an agency similar to the Energy Efficiency Services Limited (EESL), which manages bulk procurement of energy-efficient products like LED lights and solar pumps.
While the concept of a green steel procurement agency drew some interest, industry experts argue that it would not be effective. They point out that procurement rules vary across sectors such as road, power, and railways, which already have their own mandates and agencies.
Instead, what these sectors need is a clear definition and threshold for green steel, which could then be managed through existing supply chains.
A report from the Steel Ministry in September this year estimated that the cost of green steel could add a premium of 10 to 15 percent to government projects, potentially raising the annual budgetary impact to as high as
per cent28,730 crore by FY31.
However, the report noted that even with a 30 percent premium on green steel and 20 percent replacement of conventional steel, the impact on infrastructure projects would only increase costs by about 1.1 percent.
In response, the Steel Ministry continues to focus on creating a framework for the Green Public Procurement (GPP) policy for the sector, aiming to boost the demand for green steel in India.
Meanwhile, several private companies with established climate goals are expected to adopt green steel as part of their sustainability efforts.
The total steel consumption by the public sector is expected to rise significantly by FY31, further highlighting the importance of defining and incorporating green steel in India's infrastructure development.
(KNN Bureau)
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