Gujarat power tariff, gas price cuts evoke mixed response from industries

Companies using conventional energy find tariff cut unsatisfactory whereas those consuming CNG have welcomed the move

Industries in Gujarat have elicited mixed response over recent cuts in electricity tariff and natural gas prices in the state. 

While the ones using conventional energy being distributed through the four state-run discoms have found the tariff cut unsatisfactory, those consuming compressed natural gas (CNG) have welcomed the move.

Recently, in accordance with New Domestic Natural Gas Pricing Guidelines, 2014 issued by Ministry of Petroleum and Natural Gas (MoPNG), domestic natural gas price stood revised from $3.82 per mmbtu to $3.06 per mmbtu at 'Gross Calorific Value (GCV)' basis.

Following the same, players like state-run Gujarat Gas Company Limited (GGCL) and Adani Gas Limited (AGL) slashed prices for CNG by 90 paise per kg and Rs 73 paise per kg, respectively.

On the other hand, state power regulator Gujarat Electricity Regulatory Commission (GERC) recently reduced power tariff by 10 paise per unit for all residential consumers and 14 paise of HT consumers in Gujarat. 

With GERC also capping the FPPPA charges at Rs 1.35 per unit as against the present FPPPA of Rs 1.98 per unit. for the consumers of private sector power producer, Torrent Power Limited, the latter revised power tariff downwards by 18 paise per unit for power consumers of all the categories in Ahmedabad, Surat and Gandhinagar cities.

However, according to Jitu Vakharia, president of South Gujarat Textile Processors Association (SGTPA), the power tariff cut would result in cost savings of around two per cent for industrial members of the association.

"The cost saving would be hardly negligible. We were expecting the tariff cut to be more, given the fall in overall fuel prices such as coal and others," said Vakharia.

GGCL on Friday had slashed prices of CNG to Rs 44.75 per kg from Rs 45.65 per kg, while that for piped natural gas (PNG) came down from Rs 26.35 per standard cubic metre (scm) to Rs 23.58 per scm. 

Consequently, Adani Gas revised CNG prices in Ahmedabad and Vadodara to Rs 45.80 per kg from Rs 46.53 per kg including all taxes while price of PNG (domestic) was revised to Rs. 19.96 per scm excluding VAT from Rs. 22.69 per scm excluding VAT, with effect from midnight of April 3, 2016.

Welcoming the move, B K Patel, president of Morbi Dhuva Glaze Tiles Association said that the price cut in CNG would result in savings of about 7-8 per cent in costs.

"While the price cut does not synchronise with the global price fall, nevertheless, it is a welcome move. The industry had been reeling under rising input costs. Fuel costs tend to be around 35 per cent of overall costs for the industry," Patel said.

With around 500 units, the Morbi ceramic cluster pegs a turnover of Rs 2000 crore annually, with substantial exports share.