Tripura factories scared of gas price hike

Vol 16, PW 26 (25 Jul 13) Midstream & Downstream

Tripura, in India’s neglected northeast, has been forced to re-think its gas retail strategy following the government’s decision to link domestic prices to international benchmarks beginning April 1 next year.

Instead of concentrating on industrial users, city gas retailer Tripura Natural Gas will concentrate on selling CNG to vehicles and piping gas to homes. “Gas consumption by factories will fall when prices rise,” says a worried TNGCL source.

“Liquid fuels will be cheaper, even if you include the subsidy we receive.” Tripura will continue to benefit from a 60% subsidiary on the new post-2014 gas price but this won’t be enough to attract new industries, with factories driven back to using liquid fuels like furnace oil and LSHS.

"Industrial customers sign a 90% take-or-pay agreement for gas," adds TNGCL. "Liquid fuels are cheaper, there is no such requirement: you pay for what you use.

Gas generator sets also cost 50% more than diesel generator sets." TNGCL sells 82,000 cm/d of gas in total.

Of this, 26,000 cm/d goes to eight factories, mainly rubber processors. Plans to raise sales to factories to over 50,000 cm/d within a year by promising cheap gas have been abandoned.

Instead TNGCL is focusing on its growing CNG business and piped domestic gas to households. TNGCL already sells 36,000 cm/d to 12,000 households and sales are increasing by up to 8% a year.

CNG sales to 5000 vehicles stand at 20,000 cm/d, increasing by 15% annually.