Charotar Gas told to use expensive R-LNG

Vol 15, PW 23 (31 May 12) Midstream & Downstream

Gujarat energy minister Saurabh Patel has rejected an appeal for domestic gas supplies from India’s only gas retail cooperative Charotar Gas.

Idealistic Charotar is the only retail gas company selling piped gas to poor households in remote villages. But such households can hardly be expected to pay high R-LNG rates.

So a Charotar team met energy minister Patel on April 26 asking for help to secure domestic gas so the company can expand into the central Gujarat villages of Nar, Dharmaj, Morai, Undel, Jitodia, Virsad, Bochasan and Lambhel. Patel’s response: “Ask for anything else but not cheap gas!” State-owned GSPC is no help either.

It forces Charotar to pay high spot R-LNG rates for drawing anything above its Daily Contracted Quantity (DCQ) of gas or 85,000-cubic metres. Charotar must pay up to Rs50/cubic metre, or double its regular purchase price, for any gas drawn above the DCQ.

“GSPC doesn’t even allow us a 10% leeway,” we hear. GSPC supplies term R-LNG to Charotar at Rs21.36/ cubic metre, excluding VAT and service tax.

Charotar must pay another Rs1/cubic metre as gas transportation charges to GSPC group company Gujarat State Petronet. It sells this gas to nearly 15,000 households at the rock-bottom rate of Rs25.96/ cubic metre.

“We are the only CGD operator to function on such low margins,” we hear. Charotar supplies 22,000 cm/d of spot R-LNG to over 110 factories and 362 businesses like restaurants, hotels and hostels, through its 850-km pipeline network.

GSPC has yet to respond to Charotar’s January 7 letter, seeking to increase the DCQ to 107,000-cubic metres to avoid spot rates.