Panic at Gujarat Gas as Morbi gas supply drops
Gujarat Gas is fighting to maintain gas sales to the Morbi ceramics factory cluster in Gujarat.
With ceramics exports to the Middle East hit, BSE-listed Gujarat Gas anticipates a 30-40% fall in sales to the cluster in July, August and September (2024). "This dip will be temporary," says a Gujarat Gas source.
"We hope the Morbi market will gain momentum from October 2024." Increasing Middle East tensions have hit ceramic exports from Morbi.
Add increased shipping freight costs, gas becoming costlier than rival propane, the ongoing Janmashtami festival season in Gujarat and heavy monsoon rains, and it's little wonder Gujarat Gas is facing problems selling gas to the cluster. Janmashtami (August 26) celebrates the birth of the Hindu deity Krishna and is the largest festival in western Gujarat.
"Celebrations are bigger than Diwali," we hear. "Everything comes to a standstill for more than 15 days."
Also worrying is the increasing gap between gas and propane prices. From July 4 (2024), Gujarat Gas increased the gas price in Morbi by Rs2/cubic metre ($0.02) to Rs44.68/cubic metre ($0.54).
"Our piped gas is now Rs4/cubic metre ($0.04) costlier than propane which is at Rs40/cubic metre ($0.48)," we hear. In April, May and June 2024, the gas price was Rs42/cubic metre ($0.50), and propane was Rs41/cubic metre ($0.49).
"Morbi factories are comfortable with a gas premium of Rs1 to Rs2/cubic metre over propane," says Gujarat Gas. "After that, they switch from gas to propane."
Overall, Gujarat Gas registered a sharp increase of 23% in piped gas sales to factories in April, May, and June 2024, when it supplied 7.25m cm/d compared to 5.88m cm/d for the same period in 2023. Gujarat Gas operates in 27 retail gas areas across six states and one union territory.
It has 40,200-km of steel and plastic pipelines supplying 10.98m cm/d gas to more than 2,150,000 households, 4400 factories and 15,200 businesses. Formerly owned by UK company BG, it operates 811 CNG stations serving 400,000 vehicles/day.