KG-D6 gas for steel: No other alternative,says Task Force

In its recent report,the Task Force said that by de-classifying steel from the priority sector,the government has triggered uncertainty among gas-based utilities like Essar,JSW Ispat and Welspun Maxsteel,who need a minimum of 4.19 million metric standard cubic metre mmscmd gas supply per day to ensure execution of their targeted production.

The Task Force said the petroleum ministry had initially allocated gas from the KG-D6 fields to the sponge iron units of Essar,JSW and Welspun. However,an order on March 30,2011 directed that supply be given on priority to core sectors first and later to other sectors including steel. This resulted in the companies relying on imports of re-gasified LNG,a costly,exercise,the panel said. According to the Plan Panels Working Group,domestic natural gas is priced at 4.2-5.7 per mmbtu as against 13-14 for imported LNG. The Task Force said that natural gas for existing sponge iron units is crucial for their survival for there are no other fuel substitutes.

Dilip Oommen,CEO,Essar Steel said,We have set up our plant based on gas supply which we were assured. Now,mid-way we are being told that supply will be curtailed 8230; The only recourse left to us is importing RLNG,which is an extremely costly exercise.