Drop in retail gas prices as three operators slash rates

Vol 12, PW 25 (21 May 09) Midstream & Downstream

Three gas retailers in Gujarat have further slashed the price of industrial piped gas from May 1 in an attempt to retain customers tempted by cheap alternative liquid fuels.

“The scenario is depressing,â€‌ Charotar Gas managing director AJ Parmar tells PETROWATCH. “What better way to bring cheer than to cut prices.

â€‌ State-owned GSPC Gas has reduced its price by Rs1/cubic metre; private sector Adani Energy has slashed its price by Rs2.80/cm; and on May 8 cooperative Charotar Gas also agreed to reduce its price by Rs2.10/cm. This is the fourth downward revision by GSPC Gas and Adani since November 2008, and the second by Charotar.

“Because of the economic slowdown,â€‌ reports a senior GSPC Gas source, “customers are demanding a price cut; we had to agree.â€‌ GSPC Gas supplies 1.75m cm/d across Gujarat and over the past six months has progressively reduced its price from a high of Rs23.50/cubic metre last November 2008 to a low of Rs14.50/cubic metre today for Vapi consumers and Rs14.90/cm for others.

Adani has likewise reduced its price from a high of Rs26.70/cm last November to Rs15.90/cm today. “In the past six to eight months customers have become very sensitive to fuel prices,â€‌ reports Adani.

“They also compare prices with other CGD operators more than before.â€‌ Adani - which supplies 230,000 cm/d to 260 industrial consumers in the Vatwa area of Ahmedabad and 40 consumers in the Nandesari area of Vadodara - has also slashed the penalties levied on customers who exceed their Daily Contracted Quantity (DCQ).

From May 1, the penalty will be more than halved to Rs17.40/cm from Rs37.20/cm. As you would expect, state government officials are pleased.

“These price cuts will benefit more than 1000 factories across the state,â€‌ says one. Gas retailers are less happy.

“I have to give this price cut from my profits,â€‌ adds Parmar of Charotar Gas. “But in these hard times survival comes first.