Gas shortage upsets textile firms' power plant plans

Acute shortage of gas has upset the plans of Gujarat-based textile majors to set up gas-based captive power plants (CPP).

Textile firms in the state have lined up plans to set up gas-based CPPs as other modes of power generation has become unviable owing to high oil and naphtha prices.

Textile firms in the state account for over 25 per cent of the country's textile exports. Power expenses account for over 10 per cent of the total cost of production of these firms.

"Arvind Mills has a captive power plant of 40 mw but due to technical issues there has been a delay in the supply of gas to the plant," said Jayesh Shah, director and chief financial officer, Arvind Mills.

The company had proposed to convert its four-naphtha-based turbines to gas-based CPPs. These turbines are located in Naroda and Santej. The pipeline work for these plants have been completed.

"The cost of power is the highest in Gujarat which needs to be brought down immediately, so as to enable us to be more competitive in the international market," said Vinod P Arora, chairman and managing director, Aarvee Denims and Exports.

The company, which is planning to set up its own captive power plant of around eight mw, is facing shortage of gas. "We are in talks with the Adani group for supply of gas, but have not received any assurance. We have even approached by the ministry to address the power problem in Gujarat to enable us internationally competitive" said Arora.

"If gas is not available, we may plan for wind power, but the capital requirement for this is very high," Arora said.

Welspun India,a part of the Rs 2,000 crore Welspun group and India's largest terry towels manufacturer and exporter, is planning to convert its oil furnace-based captive power plant into a gas-based one.

"We are planning a gas-based captive power plant to save operational cost, but at present the availability of gas in Gujarat is an issue of concern for us," said a company official.

"Group Ashima, which has a 100 per cent captive power plant with nine mw capacity based on furnace oil, was established five years back. We are have no plan to shift to gas-based power generation now as the cost of conversion would be higher. Availability of gas is another issue. However, companies planning to set up captive power plants may consider gas as a viable option," said B Ravi, vice-president, corporate finance and company secretary, Ashima Group.

Though the government of Gujarat has taken various steps to facilitate the expansion plans of textile firms in the post-quota era, the issue of high cost of power still remains unattended.

"The Union ministry of textiles has initiated many policies to assist the textile and the clothing industry of the country and to bring the Indian textile industry at a level playing field," said Shankarsinh Vaghela, Union minister of textile, on Wednesday.