With Reliance Industries Ltd (RIL) cutting gas supplies to steel companies on Monday, the petroleum ministry has been forced to grant a hearing to the affected companies tomorrow. This follows a Bombay High Court directive to the ministry asking it to give Ispat Industries and Welspun Maxsteel an opportunity to present their cases. Essar Steel that challenged the cut at the Delhi High Court will also attend the meeting.
In addition, the other affected consumers in refineries and petrochemicals sector will also be given a hearing. The meeting would be chaired by Apurva Chandra, join secretary (marketing) in the ministry, said a ministry release. After output from the country’s biggest gas producing block dropped 20 per cent, the ministry directed RIL in March-end to first meet the demand of priority sectors such as fertilizer and power, and in case any gas is left it should be supplied to the non-priority sectors such as steel, petrochemicals and refineries on a pro-rata basis.
In its petition to the Bombay High Court, Welspun said the company should be given natural justice and there should not be any arbitrary cut in gas supply. Essar’s steel production has been affected to the extent of shortfall in gas supplies from RIL. The Delhi High Court will hear the Essar case on May 12, while the Bombay High Court will hear Ispat and Welspun’s case on May 23.
Reliance has so far signed firm contracts for 60.76 mscmd of gas, while production is less than 48 mscmd. The government had accorded highest priority to fertilizer plants followed by LPG extraction units, power plants and city gas distribution projects in allocating KG-D6 gas. Another 30 mscmd gas was being supplied on a fall-back basis.
Sixteen fertiliser plants have been allocated 15.35 mscmd of KG-D6 gas on firm or permanent basis, while 27 power plants in public and private sectors have been allocated 29 mscmd of gas. A sizeable 7.79 mscmd of gas has been signed up with steel producers while LPG plants have got 2.59 mscmd. Refineries, including that of RIL, have been allocated 3.46 mscmd, city gas projects 0.65 mscmd and petrochemical plants the balance 1.92 mscmd.