Gujarat's chemical industry feels price pinch

TROUBLE TIME

It's not just the commuters who have to cough out more for travelling in the 40,000-odd CNG rickshaws in Ahmedabad. The brunt of the hike in gas prices is also being felt by the state's chemical industry.

The hike in the prices of piped natural gas (PNG) and CNG has upset the Rs 3,000- crore ceramic industry of Morbi and many are now switching back to coal.

"Of the 250 units in Morbi, about 125 had turned to gas. However, the recent price hike has made as many as 25 units switch back to coal. Coal is 30 per cent cheaper than the price of PNG," said GM Pethapara, president, Gujarat Vitrified Tiles Manufacturers Association.

The Centre has decreased the subsidised quota of gas for Gujarat and this is believed to have prompted the price hike by companies like Gujarat State Petroleum Company (GSPC) and Adani Energy.

Industries and auto-rickshaw unions are planning to approach the state government this week, sources said. "Adani has announced a price hike by Rs 3.50 per kg to Rs 29 for CNG- run vehicles," a company official said.

Adani had earlier hiked the price for piped gas for industrial usage on January 16, 2008, from Rs 14.41 to Rs 17.50 in Ahmedabad and from Rs 13.87 to Rs 17.50 for Baroda.

According to company officials, since the purchase price has already been hiked, they are left with no alternative but to pass it on to the consumers. Adani is purchasing CNG at the rate of $4.05 per Mcf and $10.55 per MMBTU. Adani procures gas from public sector GSPC.

Gujarat Chemical Association's president Jaimin Vasa said the price hike of CNG was too high, which the small and medium units cannot bear. Units in Kadi, Mehsana and other parts of region will suffer a lot.

Sodium silicate manufacturers will also be affected adversely and production cost of small units will increase 15-20 per cent.