Essar Steel's petition challenging the Centre's decision to give top priority to fertiliser and power plants in the allocation of gas from RIL's KG-D6 field suffered a setback today, with the Delhi High Court refusing to grant a stay for the time being.
Presiding over the hearing, Justice S Muralidhar said, "Right now I am not going to stay the (Centre's) order," after the Centre indicated that it would give its opinion on the plea after perusing the Bombay High Court's order on a similar petition.
"Right now we cannot give an opinion without perusing the Bombay High Court order on the issue. We will have to take an instruction as well," Additional Solicitor General A S Chandiok told Justice S Muralidhar.
The matter has now been posted for further hearing on May 12, as the ASG sought time for responding to the petition.
The Centre's response came on the petition of Essar Steel Ltd against the Centre's order asking Reliance Industries to give top priority to fertiliser and power plants while supplying natural gas from KG basin fields.
Former Additional Solicitor General Mukul Rohatgi, appearing for the private steel major, said the order of the Ministry of Petroleum and Natural Gas Resources was taken without considering its legitimate concerns.
The company has challenged two letters written by the Ministry of Petroleum and Natural Gas (MoPNG) to RIL and its partner Niko Resources of Canada to give core sectors priority while selling natural gas from its KG-D6 fields.
Essar Steel has submitted that the directions are "illegal and arbitrary" and they were sent to RIL without any approval of the Empowered Group of Ministers (EGoM), which had originally allocated the gas among various players, including the steel sector.
"These instructions of MoPNG are not backed by any authority or any enabling decision taken by the EGoM and therefore, the same are unilateral in nature, that too, in deviation of the earlier decision/guidelines by EGoM and, therefore, bad in law," said Essar Steel in its petition.
It said that as a result of the order, the company may lose 3.2 million standard cubic metres per day (mmscmd) of gas allocation from KG-D6, as RIL was producing just enough to meet the contracted demand of the priority sectors only.
Essar Steel submitted that in October, 2008, the EGoM had decided to give priority to gas-based sponge iron and steel plants along with the fertiliser, LPG, power and city gas distribution (CGD) sectors.
However, the CGD sector was unable to consume the entire allocated quantity of 5 mmscnd and as such, there was a surplus of 3.75 mmscmd, which was allocated to the steel sector. Essar had got 2.86 mmscmd of this quantity.