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Surat textile units eye coal, blame high gas prices

Vinay Umarji  |  Mumbai/ Ahmedabad 

With city gas distribution service provider Gujarat Gas unable to meet Surat textile industry's requirement at contracted price, several processing units are moving back to the conventional thermo-pack technology that uses coal to heat boilers.

Almost 90 per cent of the 400-odd textile processing units had converted from thermo-pack technology, where coal is used to heat oil which in turn heats boilers and dryers, to gas-based ones.

However, with high cost burning holes in their pockets, several of them are seen moving back to the conventional method of heating.

Gujarat Gas meets 75 per cent of its gas requirement from Gas Authority of India Ltd (GAIL). The gas supply by to Gujarat Gas was brought down to around 40 per cent in the past.

The volume of gas has been restored approximately to levels supplied prior to notification of the Force Majeure (FM) event at the oil evacuation system of the Panna and Mukta fields, the company had informed Bombay Stock Exchange in August. However, the increased supply by was less than the contracted quantity of 2.13 mmscm, according to industry sources.

Gujarat Gas has also written to the ministry requesting for allocation of about 0.5 mmscmd of D6 gas to meet their requirements.

"Currently, Gujarat Gas has been supplying us only 60 per cent of our requirement at contracted price of Rs 11 per cubic metre. The remaining 40 per cent has to be procured from Gujarat Gas at Rs 16 per cubic metre which is turning out to be very costly for us. This has resulted in many of our members moving back to the conventional thermo-pack technology for heating," said Pramod Chaudhary, president of South Gujarat Processors' Association (SPGA).

What's more, according to Chaudhary, the conversion from CNG-based boilers to thermo-pack is bringing an additional burden of Rs 1 crore for these units. At least 40-50 units have already converted from gas to thermo-pack technology, according to Chaudhary.

When contacted, an official of Gujarat Gas declined to comment on the issue.

"We had made representations to the government as well for relief in gas prices. However, we are witnessing severe imbalances in our costing due to high gas prices. This has forced us to shift back to coal. Since we were incurring higher cost by using gas, we were also facing tough competition in Chinese and other markets in terms of pricing of our products," said Shrikant Mundra, managing director of Ramanuj Dyeing and Printing Ltd., which recently converted back to thermo-pack technology.

Similarly, Agrawal Silk Mills, which used to buy from Gujarat Gas has also converted back to thermo-pack. "Since we were procuring gas at a high quantity, we were incurring losses from the 40 per cent additional price that we were paying to Gujarat Gas. Therefore, last month we converted back to thermo-pack which cost us around Rs 1 crore," said Vinay Agrawal, managing director of Agrawal Silk Mills Limited.

Of those who have already converted back to thermo-pack technology also include Pratibha Fabric Ltd and Panchsheel Intermediates.

Chaudhary added that the industry had requested Gujarat Gas to look for long term procurement of gas in order to supply full quantity of the fuel at contracted price. "As compared to our requirement of three lakh cubic metre per day, only 1.67 lakh cubic metre per day of gas is supplied to us at the contracted price of Rs 11 while the balance is provided at Rs 16 per cubic metre," said Chaudhary.

According to Mahendra Kajiwal, former president of Federation of Surat Textile Traders Association (FOSTTA), the textile industry in Surat processes about 30-40 million metres of grey cloth per day.

First Published: Fri, September 25 2009. 00:06 IST