Glass units suffer as tariffs get revised for third time

Already struggling to keep up with their production demands amid frequent strikes by workers, the Firozabad glass units have been dealt another blow by the Gas Authority of India Ltd (GAIL) by revising its CNG tariff for the third time since last year forcing the shutdown of over thirty per cent of the glass-blowing units in the town.

According to industry sources, the prices for overdrawn gas, which used to be Rs 6.50 per cubic metre (pcm), had been revised to Rs 12.50 pcm in December last year.

Now the rate has further been revised to about Rs 33 pcm with effect from February 20. Production rates of major glass-blowing units of Firozabad have since gone down by 80 per cent.

Pradeep Agarwal, director, Transparent Overseas, said that there were 25-30 glass-blowing units consuming around 200 cubic metre CNG per day but their gas quotas had been allocated at a much lower slab.

Consequently, most of the gas consumption in these units was in the form of "overdrawn" gas which was earlier charged at Rs 12.50 pcm. But now, it will be charged at Rs 33 pcm. This has been a huge difference in prices and a cause of panic in the entire glass industry. CNG is in use due to pollution concerns.

Most of these units had also cut down their production targets drastically to prevent their fuel bills going overboard, but at least 30 per cent of the glass units had either shut down due to rising operational costs or were in the process of downsizing in order to remain in business.

On an average, Agarwal claimed, a medium-sized glass unit used to spend around Rs 62,000 for the overdrawn volume of gas. But now, this cost will rise to about Rs 1,65,000. This will become an unbearable burden on the glass units, he said.

He claimed that the Firozabad glass industry was already in dire straits due to a major drop in exports this year with the reduced dollar exchange rates and the availability of cheaper Chinese glassware in the market.

If gas prices continued to rise, this ancient industry will have to relocate out of Firozabad to remain in existence, he said.

Notably, the prices of re-liquefied natural gas "" a term used by GAIL for the gas volume consumed over the administered price module (APM) gas "" has been rising gradually over the past three years. However, over the last year, the price hikes have been rather sharp, from Rs 9.50 to Rs 33.

The state government too has levied a 20 per cent value-added tax (VAT) on CNG in place of the 4 per cent trade tax which was applicable till now, raising concerned voices among the industrialists of this glass town.