Govt firm on decision to divert KG-D6s supply to priority sectors

19-May-11

In line with the Mumbai high court direction, the Union government will be informing users of gas from Reliance Industries’ D6 field in the Krishna-Godavari (KG) basin that supply would be available to non-priority sectors only after requirements of the priority sectors of fertiliser, LPG, power and city gas distribution; are met. A similar stand is expected at the Mumbai and Delhi high courts, where Welspun Maxsteel, Ispat Industries and Essar Steel have challenged the petroleum ministry’s decision to divert KG-D6s supply from steel and petrochemicals to power and fertiliser. After a 20% drop in output from the country’s biggest gas producing block, the ministry directed RIL in end-March to first meet the demand of priority sectors such as fertiliser and power. If any gas is left, it should be supplied to the non-priority sectors such as steel, petrochemicals and refineries on a pro-rata basis. RIL, accordingly, has cut supply to steel, petrochemical companies and refineries. Reliance has signed customers for 60.76 mscmd of gas, while production is less than 48 mscmd. Sixteen fertiliser plants have been allocated 15.35 mscmd of KG-D6 gas on a firm or permanent basis, while 27 power plants in the public and private sectors were allocated 29 mscmd. A sizeable 7.79 mscmd 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.