Selan forced to slash Bakrol gas price

Vol 20, PW 7 (15 Dec 16) News in Brief

Selan Exploration will have little choice but to accept demands from its customers and slash the gas price from its Bakrol field in Gujarat by up to 15%.

"Selan has no option but to bring down the price from Rs12.50/cm ($0.18) if not to ONGC levels then at least to Rs9/cm ($0.13)," confides a Selan customer to this report. ONGC sells gas at Rs7.50/cm ($0.10) after the six-month government-fixed gas price for state-owned companies fell to $2.50/mmbtu from October 1, 2016.

Selan customers pay almost double ONGC's price. "Factories with high fuel costs will not survive," we hear.

"If you do a reverse calculation, Selan's price is $4.20/mmbtu." Selan was resisting cuts arguing that its GCV (Gross Calorific Value) was over 12,000 kcal/cubic metre but customers refuted these claims with their own tests. Selan's price includes royalty but customers must pay 15% VAT of which 11% can be claimed back as rebate.

Four sodium silicate factories are supplied Bakrol gas: Advatech - 8000 cm/d, Excel Industries - 5000 cm/d, GR Industries - 5000 cm/d and Shanti Chemicals - 4000 cm/d. Expect the new price to come into effect by the end of this year.