The steel ministry in tandem with the oil ministry will examine options of restoring domestic gas supply to steel plants that are stranded for want of natural gas from domestic sources.
"In the case of gas-based steel plants which have been stranded due to lack of supply of natural gas from domestic sources, options will be evaluated in coordination with the Ministry of Petroleum and Natural Gas (MoPNG) for restoration of domestic gas supply to the steel sector," an official said.
Sponge Iron Manufacturers Association Executive Director Deependra Kashiva told PTI that three gas-based sponge iron projects -- JSW Steel Salav, JSW Steel Dolvi and Essar Steel -- were set up in 1990s based on assurance from the government on regular gas supply.
However, "these plants are getting hardly 30 per cent of their gas requirement and therefore are operating at a very low capacity", he said.
The Sponge Iron Manufacturers Association (SIMA), an all India apex industry body, has been pushing for an increase in natural gas supply from domestic sources and inclusion of the steel sector under the common pooling mechanism.
"We have also been demanding inclusion of natural gas and high-speed diesel under the GST regime," Kashiva said.
To ensure long-term availability of natural gas, the steel ministry will also approach the ministry of petroleum and natural gas to explore new reserves, the official said.
The technology of coal gasification to produce syngas for subsequent usage will also be encouraged, the official added.
Under the Paris Treaty (COP 21), India intends to reduce the emission intensity of its GDP by 33-35 per cent by 2030 from 2005 levels.
In order to achieve this target, India needs to find energy-efficient resources that are affordable and also available. Natural gas is one such greener alternative.
Ensuring firm supply of natural gas is imperative to boost confidence and investment in the gas based steelmaking technology, the official added.
Earlier, the government had said the reduction in import duty on liquefied natural gas (LNG) would benefit stranded gas-based steel plants and encourage more sponge iron producers to go for gas-based production route.
The government had halved the import duty on LNG to 2.5 per cent from 5 per cent.
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