Bloomberg reported that Steel Authority of India Limited has scrapped a USD 1.2 billion plan to build its first natural gas fired factory with Japan’s Kobe Steel Ltd, anticipating a shortage of the fuel.

Mr PK Misra Steel Secretary said in an interview that “We’ve decided not to proceed with the project. Sourcing gas for the plant will be difficult.”

He added that SAIL will proceed on its own with INR 50 billion power plant that was planned as part of the project at Jagdishpur in the eastern state of Uttar Pradesh.

He said that power from the 1,000 MW unit will be sold to the nation’s transmission and distribution companies.

Mr Misra however said that separate negotiations are continuing between Steel Authority and Kobe to build a 500,000 tonne iron nugget plant using the Japanese company’s ITmk3 technology in West Bengal state.

Mr Gary Tsuchida, a spokesman for Kobe Steel in Tokyo, declined to comment on the Jagdishpur project.

Dwindling output at India’s biggest natural gas field has prompted the government to halt supplies to companies other than power producers and fertilizer makers.

(Sourced from Bloomberg)