The Hindu Business Line : SAIL, GAIL sign pact on natural gas supply

STEEL Authority of India Ltd (SAIL) and GAIL (India) Ltd have signed a Heads of Agreement (HoA) for supply of natural gas or regassified liquefied natural gas to various plants of SAIL.

A HoA is a non-binding document outlining the main issues relevant to a tentative partnership agreement. It is the draft used by lawyers when drawing up the contract. It serves as a guideline for both parties before any documents are legalised.

It envisages supply of natural gas to the tune of 3.56 million metric standard cubic metre per day in 2006-07 to various SAIL plants.

With this move, SAIL has become the first steel producer to opt for use of natural gas as an alternative source of coking coal. Non-availability of coking coal during the first few months of the current financial year had prompted the company to opt for use of alternative fuels like coal dust injection, coal-tar, etc. Once the natural gas is available under the agreement, the company can further bring down the consumption of coking coal to the extent of around 1 million tonne per annum.

Speaking on the agreement, the SAIL Chairman, Mr V.S. Jain, said, "The agreement signed between SAIL and GAIL is historic. The cost of energy constitutes 32 per cent of our cost of production. Use of natural gas as a substitute to the conventional fuel is a desirable option in view of its environment-friendly feature."

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