Naik steps into Essar gas row with ministry

Vol 6, PW 6 (22 May 02) Midstream & Downstream

Essar might be in for a pleasant surprise.

Oil minister Ram Naik has asked it to submit a "detailed and fresh representation" so he can resolve a 12-year old gas row. Despite Naik's willingness to help, the omens are bad; not least because of the messy way Essar has handled the case.

It began in August 1989 when the Gas Linkage Committee of the oil ministry said Essar could have 800,000 cm/d for a new sponge iron plant in Kakinada. But Essar's plan for Kakinada stalled, and in May the next year the ministry shelved its commitment, despite Essar's protests.

A year later Essar wrote to the oil ministry asking that its "allocation" for Kakinada be transferred to its sponge iron plant at Hazira. No, said the ministry.

In 1993 Essar took the issue to court but by now the oil ministry discovered Essar had scrapped the Kakinada project and returned the land to the state government. Yet in 1999 Essar asked the ministry to "regularise" its allocation for Kakinada! Separately, the steel ministry told the oil ministry Essar was asking for its Kakinada gas allocation to be transferred to its Vishakhapatnam steel pellet plant! In March last year the courts directed GAIL to take a "final decision" but in June the same year the oil ministry again turned down Essar's request for gas for Kakinada.

Essar wrote more letters but the oil ministry stood firm and once again Essar went to court. InDecember last year judges asked the government to "reconsider" the case.

Hence Naik's willingness to get involved, communicated to Essar in a letter dated 5th May.

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