The Hindu Business Line : GAIL move to market PMT gas impacting prices in Gujarat

Gas woes
The State gas based power utilities, NTPC Gandhar, Kribhco, and IIFCO have been hit by the availability crisis.
Increasing dependence on spot LNG has already forced GSPC group to effect 30 per cent price rise for bulk industrial customers.

Pratim Ranjan Bose

Kolkata, Jan. 7 The Union Government’s recent decision to allow GAIL to market the production of Panna-Mukta-Tapti joint venture may have finally started impacting the availability as well as price of gas in Gujarat.

Sources in GSPC and Gujarat Gas Corporation Ltd (GGCL) confirmed substantial reduction in availability of natural gas from PMT leading to suspension or reduction of supplies to several bulk customers in power and fertiliser sector in Gujarat.

Natural gas supplies (from PMT source) to GSPC and GGCL dropped by 1.7 million standard cubic metre a day (mmscmd) and 0.8 mscmd respectively

According to sources, so far the State gas based power utilities, NTPC Gandhar, Kribhco, and IIFCO have been hit by the availability crisis and may have either switched over to naphtha or fuel oil or high cost LNG to tide over the shortfall in natural gas supplies.

Increasing dependence on spot LNG – now ruling as high as $18 per mmBtu – has already forced GSPC group to effect 30 per cent price rise for bulk industrial customers.

Prices are increased by a flat 20 per cent for supplies to city gas distributors like GSPC Gas, Sabarmati Gas and Adani Energy engaged in CGD business in Ahmedabad and Vadodara.

“The impending situation may force CGD players to pass on the increasing cost of procurement to end customers including domestic, retail and small and medium industry sooner or later,” said a GSPC official.

“As things stand today, we may have to resort to further price hike,” the official added. GSPC is now getting 1.7-1.8 mmscmd day as against its previous off-take of 3.4 mmscmd from PMT. The company has already increased spot LNG procurement by 1 mmscmd.

Sources in GGCL confirmed that the “gas prices are heading north” and that the company might have to resort to price hike sooner or later. The parent British Gas has appealed before the Union Ministry of Petroleum and Natural Gas to ensure steady supplies to GGCL.

Depending upon the natural gas availability the company would take a call on procurement of LNG in 2008. “The emerging situation may force us to depend on LNG to maintain supplies to customers and pass on increased cost of procurement to our customers,” a GGCL source said.

One of the earliest private sector CGD player in India, GGCL has so far maintained that spot LNG was not a viable energy source for city gas distribution in India.