Vizag Steel turns to PNG as LPG prices spike, supply falters

Facing rising fuel costs and supply disruptions, Rashtriya Ispat Nigam Limited (RINL), the corporate entity of the Visakhapatnam Steel Plant, has begun shifting part of its energy use to piped natural gas (PNG).

The move comes at a time when liquefied petroleum gas (LPG) prices have surged, and supplies have tightened due to the ongoing West Asia conflict. At the same time, the plant is producing less coke oven gas (COG), a key fuel generated during steelmaking.

The plant depends on a mix of LPG and COG for critical operations, including precision steel cutting. At peak capacity, it needs about 45,000 cubic metres of gas per hour. However, it is currently facing a shortfall of nearly 15,000 cubic metres per hour.

Officials said ageing coke oven batteries have reduced COG output. This, combined with the sharp rise in LPG prices, has made the existing fuel mix difficult to sustain. LPG prices have jumped from around ₹70,000 per tonne before the conflict to nearly ₹1.15 lakh per tonne.

To address the issue, RINL held discussions with Indian Oil Corporation Limited and secured a supply of PNG. A 4.5-km pipeline has been laid from IOCL’s LNG facility at the AP Medtech Zone to the plant’s gas mixing station.

Work on the pipeline began on April 2, and gas supply started on May 5. In the first phase, the plant is receiving 18,000 standard cubic metres per day. In the second phase, supply is expected to rise to 62,000 standard cubic metres per day by May 2027.

The shift is also expected to reduce costs. Officials said generating one gigacalorie of energy using LPG costs about ₹9,000, while PNG costs around ₹6,500.

For now, the plant continues to use a mix of fuels to maintain production. However, the shift to PNG is expected to improve stability and reduce dependence on volatile global fuel markets.