Non-core gas users hit out at petromin over RIL quota cut | business | Hindustan Times
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Non-core gas users hit out at petromin over RIL quota cut

business Updated: May 11, 2011 21:57 IST
HT Correspondent

Sponge iron and steel manufacturers led by Essar Steel, Welspun Maxsteel and Ispat on Wednesday hit out at the ‘unilateral’ decision of the petroleum ministry to curb natural gas supplies from Reliance Industries’ KG-D6 fields to non-core users saying only a ministerial panel was empowered to take such a decision.

Sources however say the petroleum and natural gas ministry, which had called a meeting of the users of KG-D6 gas on Wednesday under the direction of Bombay High Court, is unlikely to heed to their request.

Officials from Essar Steel, Welspun Maxsteel and Ispat had pointed out that it was the the Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee that had allocated gas to them, and as such only the EGoM could cancel the allocation.

“We heard all of them and will pass an order by May 18 as directed by the Bombay High Court,” said Apurva Chandra, joint secretary (marketing), Ministry of Petroleum and Natural Gas.

Chandra said Essar pleaded that it would cost about R1,000 crore extra annually if it is to replace KG-D6 gas with either liquid fuel or imported LNG at its plants. Welspun and Ispat stand to pay out R150-200 crore.

Reliance, which was also represented at the meeting, had on May 8 cut supplies to sponge iron makers, refineries and petrochemical plants while meeting its commitment to core users in the fertiliser and power sector. Its gas output has been sinking in recent weeks.

Power and fertiliser companies, who too were invited for the meeting, pointed out that they needed the full quota of gas to meet peak season demand.

Reliance said it was only following the ministry's dictat, and had no role either in fixing the price or deciding on the end users.