Steel manufacturers today hit out at 'unilateral' decision of the Oil Ministry to curb natural gas supplies from Reliance Industries' (RIL) KG-D6 fields to non-core users saying only a ministerial panel was empowered to take such decision.
However, the Oil Ministry, which called a meeting of its users, under direction from Bombay High Court, is unlikely to heed to their request, sources said.
Sponge iron makers Essar Steel, Welspun Maxsteel and Ispat officials at a meeting called by Petroleum Ministry on the issue, stated that only the Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee could cut supplies as it was EGoM which had made gas allocation to them.
"We heard all of them and will pass order by May 18 as directed by the Bombay High Court," said Apurva Chandra, Joint Secretary (Marketing), Ministry of Petroleum and Natural Gas.
RIL, which was also represented at the meeting, had on May 8 cut supplies to sponge iron makers, refineries and petrochemical plants so that its falling output can meet full demand of core users in fertiliser and power sector.
Chandra said Essar pleaded that it would lose about Rs 1,000 crore annually if it is to replace KG-D6 gas with either liquid fuel or imported LNG at its plants. Similarly, Welspun and Ispat said they would lose Rs 150-200 crore.
Power and fertiliser companies, who too were invited for today's meeting, stated that they needed their full quota of KG-D6 gas to meet peak season demand.
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RIL on the other hand said it was the most affected by the Oil Ministry's order curtailing supplies to non core users and was only following ministry's dictat. The company said it had no role either in fixing the price or deciding on its users.
The EGoM had in 2008 and then in 2009 allocated KG-D6 among users in fertiliser, LPG plants, power units, steel makers, refineries, petrochemical units and city gas firms.
Oil Ministry's curtailment order last month followed drop in production at KG-D6 fields to less than 50 million standard cubic metres per day (mmscmd) while RIL had signed firm contracts for 57.15 mmscmd and needs another 1 mmscmd for the East-West pipeline that ferries the gas.
Core sector users have signed up for 47.6 mmscmd and the ministry wanted their demand to be met first and any gas left after this could go to users in steel, refineries and petrochemical sector.
Chandra said the non-priority users were getting about one-fifth of their contracted supplies.
The ministry's decision to prioritise KG-D6 gas was challenged by Ispat Industries and Welspun Maxsteel in the Bombay High Court and Essar Steel in Delhi High Court.