Amul looks beyond GAIL for natural gas supplies

The Amul dairy is starving of natural gas supplies for production purposes and is now looking for other options to continue its operations in a more cost-effective way.

Rahul Kumar, managing director, Amul, said, "Amul is looking for alternative source of natural gas supplies as Gas Authority of India Ltd (GAIL) has not been able to supply adequate gas to us, and whatever little quantity of gas is available is not enough to run our operations".

The country's flagship brand in cooperative sector has been facing acute shortage of natural gas for some time. It consumes 10,000 cubic metre per day of natural gas.

"We had two boilers which we had bought mainly for cogeneration to reduce the cost of power. The idea was to use steam generated from the process to reduce the cost of power further."

Amul could not use the facility as natural gas supply pressure continued to dwindle for some time. Amul finally discarded the boilers as the gas supply pressure could not improve.

With inadequate natural gas supply, Amul has now turned towards liquid fuel such as furnace oil, which is much more expensive because of high crude oil prices.

The hike in natural gas prices is also going to add burden for the cooperative major. Kumar said that the recent rise in price of gas would also increase cost for the cooperative major as the hike is non negotiable.

Amul is now looking at alternative suppliers such as Gujarat State Petroleum Corporation, which supply liquefied natural gas imported by the Petronet LNG. GSPC has natural gas supply line with a land fall point near Anand at Mora.

Amul may tap this line for its natural gas requirements. Mora tapping point was created mainly to supply gas to Charotar Gas Sahkari Mandli Ltd which is also hoping to market its gas to another cooperative such as Amul.

Rahul Kumar said, "We are open to any viable option to fulfil Amul's natural gas requirement, be it from private sector or public sector."

Amul requires close to 0.4 million cubic metre of natural gas which will reduce the cost for Amul. For Amul, cost of energy is around 6 per cent of its total production cost.

In absence of natural gas, Amul has become dependent on Gujarat Electricity Board (GEB), which provides 2.4 mw of power, taking care of electricity requirement of Amul.