HC seeks Centre's reply to Welspun, Ispat plea on gas supply

The Bombay High Court today directed the Centre to file response to the petition filed by Welspun Maxsteel and Ispat Industries, major producers of sponge iron, who have challenged the government move to drastically cut gas allocation to them.

The two companies said they feared the closure of their operations because of the cuts in the supply of natural gas from the KG basin. They have challenged oil ministry's order reserving the entire KG basin output for the "core sector".

Today's direction was given by the division bench of Chief Justice Mohit Shah and Justice Girish Godbole.

Earlier, the court had asked the Ministry of Petroleum and Natural Gas to hear the petitioners as well as others, who had sought its intervention in the matter, and take a decision afresh. Accordingly, the ministry gave them a hearing last month, but stuck to its decision.

So, the petitioners are back in the court challenging the new order, on which the division bench today sought the Ministry's reply by June 14. The next hearing is on June 16.

The petitioners have argued that in the event of plant-closures or reduction in production of sponge iron, even the exchequer will suffer a loss of more than Rs 1,000 crore.

If the targeted steel production was not met, there would be a shortage and the country will have to import steel, as against the present net exporter status, they argued.