Gujarat Gas cuts PNG supply after Morbi ceramic units opt for propane gas | The Financial Express

Gujarat Gas cuts PNG supply after Morbi ceramic units opt for propane gas

Over the period of nearly one and half year, PNG price has gone up from Rs 35 per SCM to crossed Rs 63 before it was again reduced by Rs 5 recently.

Gujarat Gas cuts PNG supply after Morbi ceramic units opt for propane gas
The Morbi ceramic cluster houses more than 800 units. (File photo: IE)

With almost 300-plus units out of over 800 in India’s biggest ceramic cluster near Morbi town switching from natural gas to propane gas, state government owned Gujarat Gas Limited (GGL) PNG supply has reduced from almost 7 million metric standard cubic meter per day (MMSCMD) to as low as around 2 MMSCMD to the cluster.

Confirming the development, Haresh Bopaliya, president of Morbi Ceramic Association (MCA) said that despite recent reduction of Rs 5 per standard cubic meter (SCM) in piped natural gas (PNG) supply from Gujarat Gas, propane gas is still Rs 15 cheaper.

“In order to use propane gas, ceramic units need to incur around Rs 1 crore extra to construct safety tanks. Apart from space, the units shouldn’t be situated in the proximity of residential areas. Despite such stringent norms, more than 300 big units in the Morbi ceramic cluster have decided to switch from PNG to propane gas. As a result, cumulatively Morbi based ceramic units have started saving nearly Rs 200 crore per month on fuel,” says Bopaliya.

On October 21st, 2022 Gujarat Gas reduced PNG prices from Rs 63.15 per SCM to Rs 58.15 per SCM for three months, says Nilesh Jetpariya, past president of MCA.One of the leading ceramic product makers in Morbi said that GGL is enjoying monopoly as far as supply of PNG to ceramic clusters is concerned.

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“We want cheaper fuel in order to stay in international competition. Hence, those who can afford to develop safety tanks and have adequate space have decided to switch to propane gas. Some of the smaller units have also switched to Liquified Petroleum Gas (LPG) as even LPG is cheaper than that of PNG supplied by GGL. Indian Oil Corporation, Reliance Industries Limited and two other companies supply propane as well as LPG to ceramic units in Morbi,” he said requesting anonymity.

Over the period of nearly one and half year, PNG price has gone up from Rs 35 per SCM to crossed Rs 63 before it was again reduced by Rs 5 recently.

The Morbi ceramic cluster houses more than 800 units. Of these, more than 70 % are MSMEs. The cluster accounts for more than 75 % of the total ceramic production of India. On an average Morbi based ceramic units manufacture approximately 55000 cubic meters tiles on a daily basis. The cluster’s annual turnover is over Rs 45000 crore yearly that includes Rs 12000 crore worth of exports.

When contacted a senior official with GGL confirmed reduction in PNG supply to Morbi ceramic cluster. The official however refrained from divulging numbers citing the reason for the company’s silent period. The India’s largest City Gas Distribution (CGD) company GGL clocked average sales of nearly 9.9 MMSCMD during the quarter ended on March 2022 led by industrial sales of around 7.4 mscmd, CNG 2.2 mscmd, domestic 0.65 mscmd and commercial 0.1 mscmd. The company’s highest revenue comes from the PNG sales to Morbi Ceramic cluster which consumes nearly 50 % of gas being sold by the company, said the official.

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The Gujarat government owned company has 27 CGD licenses spread across 43 districts in 6 states and 1 Union territory in the states of Gujarat, Maharashtra, Rajasthan, Haryana, Punjab and Madhya Pradesh and Union Territory of Dadra & Nagar Haveli. GGL holds the leadership position in CGD industry in terms of size and scale of operation with more than 17 lakhs households, over 13,600 commercial customers, 711 CNG stations, more than 4,300 industrial units and over 32,890 kilometers of natural gas pipeline network.

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First published on: 08-11-2022 at 17:48 IST