Essar Steel has moved the Delhi high court against an order from the oil ministry to Reliance Industries Ltd to prioritise the 'core' sector in supplying gas from its Krishna-Godavari block off Andhra Pradesh.
Reliance Industry started implementing the order from Monday, cutting natural gas supplies to non-core users like refineries, steel plants and petrochemical units so that the demand of fertiliser, power and cooking gas extraction plants can be met in full.
According to a Times of India report, other steel makers have joined Essar and moved the Bombay high court against the petroleum ministry's order, after RIL's gas production dropped to less than 50 mcmd (million cubic metres a day) from 60 mcmd.
Essar Steel has contended that the ministry's directions are "illegal and arbitrary" since these were conveyed to RIL without the ministerial committee's approval. The committee, with cabinet-level powers, had set the priorities and earmarked quantities for each consumer.
Essar contended that the committee had in 2008 given priority to gas-based sponge iron and steel plants along with other vital industries such as fertiliser and power.
It said the gas distribution sector was unable to consume entire allocated quantity of 5 mcmd. This resulted in a surplus of 3.75 mcmd, which was allotted to the steel sector.