Surat textile processors seek rollback of gas price hike

29 Jun '12

2 min read

Textile processors from Surat are seeking a revision in the price of the natural gas supplied to them by the Gujarat Gas Company Limited (GGCL) and are expecting that their case would be heard by the Competition Commission of India (CCI) next week.

GGCL has issued a notice to textile dyeing and printing mills in Surat regarding the 9.6 percent increase in price of natural gas from July 1, 2012. It will mean that textile processors in south Gujarat will end up paying Rs. 29 per standard cubic metre of gas after the new price becomes effective.

There are over 400 textile dyeing and printing units in Surat and many of them use natural gas as a fuel. Their daily demand is estimated to be around 1.5-1.6 million metric standard cubic metre per day (mmscmd).

Mr. Vishal Budhia, Chairman of South Gujarat Textile Processors Association’s (SGTPA’s ) Gas Committee, told fibre2fashion, “Last time, the natural gas price was raised by 7.5 percent and the price has risen by nearly 200 percent in the last 18 months, which is unbearable.”

“We approached the Competition Commission of India (CCI), but our complaint against GGCL was rejected. Then, we went to Appellant Tribunal against the CCI and they have given a notice to the CCI that our case should be heard,” informs Mr. Budhia.

“We are expecting the next hearing in the coming week. It is the only hope that we have because the last judgment that was given by the Petroleum and Natural Gas Regulatory Board (PNGRB) was rejected by the Hon’ble High Court saying that the PNGRB has no power to rule over prices. So, it becomes very clear that going to PNGRB will not make any sense,” he adds.

Elucidating about the impact of hike in gas price on Surat textile processors, he says, “Around six months ago, there were around 250 textile processing units in Surat that were using gas. Out of these 250 units, 30 units have been closed by now. Textile processing units that use gas are the most affected and their margins have been badly hurt.”

“Many processing units are shifting from gas to thermopak, which entails a conversion cost of at least Rs. 10-15 million per unit,” he reveals.

“We are expecting that the CCI will constitute an Enquiry Commission, which will very clearly find that the GGCL has been manipulating prices to increase its profits,” he opines.

Fibre2fashion News Desk - India

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