Charotar Gas criticised for not reducing gas prices

Vol 12, PW 17 (29 Jan 09) Midstream & Downstream

Non-profit Gujarat gas retailer Charotar Gas is under fire for not reducing its gas price to local industries.

Take Shanti Chemicals, a leading sodium silicate manufacturer, with two factories, one at Belgaum district in Karnataka, the other at Kanjari village in the central Gujarat district of Kheda. “The availability of natural gas lured us to Gujarat,â€‌ factory owner Dhananjay Patel tells PETROWATCH.

“We thought we could slash our fuel costs.â€‌ But the sequence of events over the past few months has radically changed Patel’s mind, forcing him to re-think his decision to set up a factory in Gujarat.

“Furnace oil is available at Rs11/litre; my Belgaum operations are more viable than my Gujarat operations,â€‌ adds Patel. “I have given 15 days for Charotar Gas to bring down its price or else I am shifting to furnace oil; I have adequate quantities in stock.

â€‌ Right now Patel pays Rs19.30/cubic metre (ex-VAT) to Charotar Gas for around 3000 cm/d but reckons the price, in line with falling global crude prices, should be Rs13 or Rs14/cubic metre – what he was paying in January 2007. But since January 2007, Charotar Gas has consistently raised its prices, first in September 2007 to Rs.

15.74 and again in January 2008 to Rs16.44, followed by yet another round of increases in August 2008, which saw the price go up to the present Rs19.30/cubic metre. "When the spot LNG prices went up, GSPC hiked up the prices and Charotar was forced to pass on the increase,â€‌ admits Patel.

“But now when LNG prices have tumbled to new lows why don't they slash their pricesâ€‌ Patel points to recent price cuts by Adani Energy and GSPC Gas for industrial users and asks why Charotar Gas can’t do the same Contacted by PETROWATCH Charotar Gas managing director AJ Parmar stresses that countless meetings have been held with GSPC and that when GSPC cuts the price of wholesale gas Charotar Gas will pass on savings to customers. Charotar Gas is India's only CGD cooperative supplying 50,000 cm/d in eight towns and villages of central Gujarat.