India’s Ministry of Steel is working with other government departments to extend the benefits of “pooled pricing” of natural gas to the gas-based direct reduced iron (DRI) units of small and medium-sized steelmakers, a senior Indian government official said on Friday, March 10.
The official said that talks are in advanced stages with the Ministry of Petroleum and Natural Gas so that the pooled pricing mechanism for natural gas can be extended to the steel and transportation industries.
Under the pooled pricing of natural gas for the fertilizer producing industry, the price of cheaper domestically produced natural gas and that of higher-priced imported liquefied natural gas are averaged out and a single uniform price of the fuel is charged to the fertilizer companies.
The official said that a similar pricing arrangement will be offered to domestic gas-based steel plants very shortly. He also said that the new gas pricing regime for the steel sector is also very important to implement the new National Steel Policy.
The new steel policy, the draft of which is currently in circulation, envisages the promotion of gas-based steelmaking facilities across the country as an alternative to reducing the operation of blast furnaces dependent on imported coking coal.
The national steel policy also envisages that coal-based DRI steel producers shift to use of natural gas but, to enable these small and medium-sized DRI units to do so in a cost-effective way, natural gas would have to be made available to them at a cheaper rate so that the shift is not just from high-cost imported coal to high-cost imported LNG, the official added.