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Monday, Sep 27, 2004

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VSP may get assured supply of natural gas; to expand capacity

Pratim Ranjan Bose

Kolkata , Sept. 26

VIZAG Steel plans to expand capacity as it may get an assured supply of natural gas soon.. At a recent meeting held in New Delhi - chaired by the Secretary, Petroleum and Natural Gas Ministry and attended by GAIL (India) and ONGC - the Petroleum Ministry is said to have given a signal that the steel plant could expect to get the requisite supply of 1.5 million cubic metres of gas by 2007.

Earlier, the Andhra Pradesh Government and the Chairman of the Parliamentary Standing Committee on Petroleum and Natural Gas, Mr Janardhan Reddy, had pursued the case for Vizag Steel. The State Government had appointed L&T-Ramboll to assess the demand for gas from industries located in the State. The report is expected to be submitted next month.

Vizag Steel had earlier planned to expand liquid steel capacity from 3.4 million tonne to 5 million tonne by end-2007 by using natural gas available from the K-G Basin. However, uncertainties over gas supply had forced the company to ask its consultant Dasturco to prepare an alternative plan.

The company sources said that the meeting with the Petroleum Ministry had reduced the gas-supply uncertainties to a large extent.

"Though there was no firm commitment in the form of allocation, the Ministry clearly hinted that we could go ahead with our plan to expand production capacity by using natural gas," sources in Vizag Steel said.

Vizag Steel is now considering entering into an MoU with GAIL, the latter having already proposed laying of a Kakinada-Kolkata pipeline connecting Vizag to the K-G basin.

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