Cut in KG-D6 gas supplies: Companies cry foul

Welspun Maxsteel Ltd and Ispat Industries Ltd -- which were allocated gas from RIL`s KG-D6 gas on a firm basis -- have strongly objected to the petroleum ministry`s directive to RIL that the demand of priority sectors such as fertilizer and power should be met first, and in case any gas is left it should be supplied to the non-priority sectors on a pro-rata basis. The steel companies alleged that the ministry`s directive is a violation of the firm allocations made in its favour.

• The companies wrote to the ministry after it (ministry) directed RIL -- the operator of the KG-D6 block -- that supplies to fertilizer, LPG, power and CGD (domestic and transport) sectors should be entirely met up to their firm allocations. The ministry further directed the operator that, in case of shortfall in meeting the firm demand of the remaining non-priority sectors such as steel, petrochemicals and refineries, pro-rata cuts should be imposed on them.
• The companies pointed out that as per the ministry`s order dated November 19, 2009, they were allocated gas from the KG D-6 basin on a firm basis. So, any change in this, at this stage, is a breach of the guidelines approved by the Empowered Group of Ministers for commercial utilization of natural gas as well as the firm allocations made in its favour.