Gujarat Gas passes on high R-LNG cost to consumers

Vol 13, PW 7 (10 Sep 09) Midstream & Downstream

Gujarat Gas announced some good and bad news late last month, as the BG-owned retailer continues with its innovative but confusing dual-pricing programme for more than 1000 industrial customers in Surat, Bharuch and Ankleshwar.

The good news is that Gujarat Gas raised the threshold at which companies can draw their contracted supply of gas (Restricted Supply Level) from an all-time low of 33% in August to 61% in September. But the bad news is that those who draw more than 61% must pay an additional 7.6% to account for a recent spurt in the cost of R-LNG.

“The excess gas price is Rs15.980, plus taxes,â€‌ read a text message to customers on August 31. That means industrial customers will now have to pay Rs1.128/cubic metre more for all gas drawn in excess of the 61% threshold – the earlier rate was Rs14.852, excluding taxes.

“This price rise is thanks to raised R-LNG prices by our suppliers (Read: GSPC),â€‌ says Gujarat Gas. “The hike comes into effect from September 1.

â€‌ In short, customers drawing 61% or below their contracted quantity continue to pay the contracted price of Rs11.50/cubic metre. But those drawing gas over 61% will attract the new price of Rs15.980.

Says a Gujarat Gas customer: “With taxes my price per cubic metre for any excess gas drawn will work out to nearly Rs18/cubic metre.â€‌ Unlike other CGD operators, Gujarat Gas revises its basic price only once a year, with the last hike on February 1, when it increased its base price by 14% from Rs10.64/cubic metre to Rs11.50/cubic metre.

At Rs11.50/cubic metre, the company’s customers concede that supplies from Gujarat Gas are still the cheapest around. GSPC Gas charges Rs14.90/cubic metre, while Adani Energy supplies gas at Rs15.90/cubic metre.

Factories and industries account for the biggest chunk (2.55m cm/d) of the 3m cm/d that Gujarat Gas supplies to its 255,000 customers. Commercial and domestic customers account for 210,000 cm/d, while CNG consumers account for 240,000 cm/d.

R-LNG accounts for 700,000cm/d in the Gujarat Gas fuel supply basket.

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