The Hindu Business Line : SAIL drafts auxiliary fuel plan; eyes supply pact with GAIL

IN the light of GAIL (India) Ltd's plans to expand the national gas grid to the eastern region and the ongoing coke crisis, Steel Authority of India Ltd (SAIL) is preparing an auxiliary fuel plan.

Among other things, it plans to enter into an MoU with GAIL shortly for supply of gas to its four integrated steel plants. The PSU steel giant is also preparing tender documents to set up additional oxygen capacity on a build, own and operate (BOO) basis.

While gas will replace partly the requirement for coke, additional oxygen will be required to support the use of gas and other fuel-injection methods like coal-dust injection, coal injection and tar injection. The tender document for additional oxygen capacity is likely to be finalised in two months. If gas is available to all the four integrated plants, this will reduce the blast-furnace coke requirement by 0.75 million tonne per annum, which is close to 8 per cent of the total requirement of coke (13 million tonne). The use of gas in power plants is not considered to be beneficial at the moment.

Sources in SAIL and GAIL told Business Line that detailed pricing negotiations were on and the MoU was expected to be signed "sometime next month." SAIL has already earmarked the gas requirement in the four plants at 2.5 million cubic metres per day.

GAIL has announced its plans to lay a Rs 4,500-crore Jagdishpur-Haldia pipeline which will bring 20 million cubic metres of gas a day to the eastern region by 2006-07. The pipeline will connect at least two SAIL plants Bokaro and Durgapur on the way. Rourkela in Orissa may not be far off from the gas grid.

SAIL sources said that GAIL was "still exploring ways of linking Bhilai, which is a minimum of 500 km away from the existing gas grid."

SAIL has been pursuing the gas connectivity issue for some time and had also entered into a MoU with Unocal for supply of gas from Bangladesh. The project, however, failed to take off.