GAIL may reduce gas charges for Agra units

Glass and foundry unit owners of Agra and Firozabad may not remain in distress for long over the high prices of natural gas supplied by Gas Authority of India (GAIL).

In a meeting with a delegation of iron foundry owners of Agra, GAIL officials have indicated that the company may soon offer up to 35 per cent rebate to Agra industrialists in gas charges, in the form of reduced gas transportation charges.

Also, new industrial units will get CNG connections via the GAIL pipeline by next year after some infrastructural work is through.

Elaborating on GAIL’s assurances while talking to Business Standard, Amar Mittal, chairman of the Agra chapter of the Indian Industries Association (IIA), and president, Agra Iron Founders Association (AIFA), said the price of CNG supplied to industries in Agra had a 35 per cent gas transportation charge component, which GAIL levies for the use of its pipeline.

In a recent meeting with the joint delegation of IIA and AIFA, GAIL officials agreed to waive these gas transportation charges, provided the industrial units showed a utilisation rate of up to 90 per cent of the total gas volume of 1.1 mmscmd (metric million standard cubic metres per day) set aside by GAIL for industries in Agra and Firozabad.

Mittal said the waiver of transportation charges could result in a major drop in the gas bills of Agra industrial units by almost 35 per cent and this reduction in production costs could bring the Agra foundry industry back in competition.

Also, he said GAIL officials also showed willingness to allow new industrial units to apply for connections to the gas pipeline. Such units, which had not been able to apply for gas connections between 1996 and 2005, will now be able to seek a connection within a year. The units whose security money of Rs 2 lakh had been forfeited by GAIL for not establishing their gas furnaces in time will also be refunded.

The procedure for transferring gas connections between two locations will be made simpler to facilitate shifting industrial units, he said.

Mittal said despite repeated requests for an increase, GAIL had kept the administered price module (APM) gas allocation quota of Agra fixed at 1.1 mmscmd. He said gas demand in Agra alone was about .3 to .4 mmscmd but as most of the quota was consumed in the glass factories of Firozabad, the foundry units received less than half of their total APM gas requirement.

Mittal said there were indications that GAIL was planning to raise the prices of APM gas to bring it at par with RLNG prices, which could result in benefits of the waiver of gas transportation charges getting nullified.