Mahanagar Gas under fire from small-scale gas users

Vol 12, PW 3 (26 Jun 08) Midstream & Downstream

Look to factories in Mumbai if you want inspiration in the losing battle to secure diminishing supplies of subsidised gas for your business.

Glass, textile, automobile and paint manufacturers in Mumbai believe they’re getting a raw deal from Mahanagar Gas in the supply of gas to their factories. At issue is whether these private sector companies should be paying government-controlled subsidised prices for their gas, or market driven prices.

Representing them is the Mumbai-based Forum of Natural Gas Industrial Consumers - an umbrella organisation of household names like Mahindra & Mahindra, Larsen & Toubro, Parle Biscuits, Special Steels, Godrej, Haldyn Glass Works and Vitrum Glass Works. Over the past six years the Forum has been waging a campaign against Mahanagar Gas for the right to have cheap subsidised gas for its members.

On May 28, the Forum sent the latest in a line of stern letters to Mahanagar Gas asking it to respect government guidelines to ensure steady supplies of subsidised gas at Rs3200 per thousand cubic metres to small-scale factories that use 50,000 cm/d or less. Supporting its argument, the Forum cites an oil ministry letter written on June 20, 2005, which states that all available subsidised gas must be diverted to not only the priority fertiliser and power industries, but also to CNG users and small-scale industrial factories that use 50,000 cm/d or less – like Godrej, the Forum’s largest member, which uses 37,000 cm/d.

Forum president Rajinder Singh tells PETROWATCH that small-scale factories in Maharashtra are worse off than counterparts in Gujarat. In Maharashtra, says Singh, factories pay a delivered price of Rs11.81 per cubic metre while in Gujarat they pay Rs6.70 per cubic metre.

Singh adds that gas supplies to industrial consumers in Maharashtra have been slashed by 45% since November 2006 but that supplies to Gujarat remain steady. Acting for the Forum’s 20 members, Singh is calling on Mahanagar Gas to resume full supplies at a subsidised price, backdated from the date of the ministry letter on June 20, 2005.