AHMEDABAD: Manufacturing units dependent on piped natural gas are staring at massive cost pressures. Along with increasing PNG prices, Adani Total Gas Limited and Gujarat Gas Ltd have imposed force majeure for their industrial customers effective from March 25.
This means gas firms have not only revised gas prices but also curtailed the threshold limit to 80% of the daily contract quantity. Due to this, industries taking gas will have to pay pre-determined price for 80% of their DCQ consumption and pay hefty ‘excess gas charges’.
Force majeure relates to unforeseeable circumstances such as wars and disasters, in which gas firms can change terms in line with the guidelines of Petroleum and Natural Gas Regulatory Board.
ATGL has raised prices of PNG from Rs 71.34 per SCM (standard cubic meter) to Rs 72.34 per SCM effective March 25 for non-Minimum Guarantee Obligation customers. The price for MGO customers has surged from Rs 69.84 to Rs 70.84 per SCM. Excess gas rates have been set at Rs 96.79 per SCM. GGL has kept PNG prices at Rs 58 per SCM but imposed consumption threshold of 80% on DCQ. Excess gas charges applicable are Rs 120 per SCM.
With a prevalent duopoly in the market, industries such as ceramics, chemicals, foundries, and rolling mills are staring at a major increase in production costs. K G Kundariya, past president, Morbi Ceramics Association, said: “Gas prices accounted for 30% of our production costs but now it will be about 40% of the total.” He added: “Ceramic tile makers will be forced to leave capacities underutilized.”
Pathik Patwari, senior vice-president, GCCI said: “Already, raw material prices are high and now industries dependent on gasifiers will stare at a minimum 10% increase in production costs.”
