Steel firms to get LNG at cheaper rate
At present, imported natural gas is subjected to a charge of 5 per cent of customs duty
Extending further support to the steel sector, the government is considering a proposal to exempt steel producers from paying import duty on liquefied natural gas (LNG) they use to run their plants.
At present, imported natural gas is subjected to a charge of 5 per cent of customs duty.
The move is expected to benefit companies like Essar Steel, Uttam Galva, WelspunMaxsteel that use gas as fuel to produce direct reduced iron (DRI).
“The finance ministry is studying the proposal sent by steel and oil ministries. It would take a decision on the matter soon,” official sources privy to the development said.
Gas as fuel is utilised by a section of producers who use electric arc furnaces to produce steel using DRI. Several induction furnace operators also use gas as fuel to produce steel.
As per estimates, the gas requirement of the sector is in excess of 10 million standard cubic metre of gas per day (mmscmd).
“Even though the price of gas has fallen in international market, its landed price in India is still high at $6-8 per million British thermal unit (mmBtu).
“This is adding to the cost for domestic producers at a time when cheaper steel is being dumped in the country,” said a top executive a private sector steel company who did not wish to be named.
Domestic gas is available at $3.80 per mmBtu but as the steel sector is not in the priority list of consumers, it is not getting this source of fuel. Lowering of duty will help to bring down the cost of fuel.
The government has decided to protect the domestic steel industry as the sector one of largest having stressed assets. It has already increased import duty on steel thrice this year and also imposed 20 per cent safeguard duty for a period of 200 days on imports of hot rolled coil (HRC).