Morbi’s ceramic industry is getting back on its feet but it is running on a different fuel now.
By May, most of the Gujarat town’s ceramic units are expected to resume operations using piped natural gas, marking a significant shift away from the liquefied petroleum gas they had relied on for years. The transition reportedly has been forced by a crisis that began thousands of kilometres away.
A blockade of the Strait of Hormuz, the critical transit route for propane and LPG, disrupted supply chains in mid-March and brought Morbi’s ceramic industry to a near standstill. Over two lakh workers were affected as units began shutting down voluntarily from March 17.
Morbi has 792 ceramic units in total. Before the conflict, 415 of them ran on propane or LPG supplied by oil marketing companies IOCL, BPCL and HPCL. The remaining 377 already used piped natural gas from Gujarat Gas Ltd (GGL). That balance has now shifted sharply. By April 23, as many as 680 units had signed one-month contracts with GGL for PNG supply in May. Officials expect the remaining units to follow before the end of April.
The transition means the Morbi cluster will account for roughly half of GGL’s total PNG supply, around 70 lakh standard cubic metres per day out of a projected total demand of 149 lakh SCM per day.
The road to this point was not smooth. When the crisis first hit, GGL was forced to buy natural gas from the spot market at sharply elevated prices. Costs climbed to over USD 20 per cubic metre at the height of the disruption. Those costs were passed on to new customers, creating a painful price gap between regular and new users.
On April 1, GGL offered PNG to non-regular users at Rs 93 per cubic metre, while its existing customers paid Rs 70 per cubic metre. The Rs 23 difference angered tile manufacturers and became a flashpoint between the industry and the gas company.
The dispute was eventually resolved. GGL reduced rates for new customers to Rs 77.38 per cubic metre after spot market prices eased, falling to around USD 17 per cubic metre following a ceasefire and statements from the US president.
Officials in the know claim that the company had timed its purchases to take advantage of the lower prices and passed the benefit on to the ceramic industry.
GGL also diversified its gas sourcing during the crisis.
Before the conflict, roughly a quarter of its liquefied natural gas portfolio came from Qatar. With that supply disrupted, the company turned to sources in Oman, Angola, Nigeria and Texas, as well as domestic fields including the RIL-BP KG-D6 Basin and Cairn Oil and Gas in Barmer.
In a statement, GGL reportedly said it had proactively sourced natural gas from non-Middle East markets at higher spot rates to maintain supply in line with government directives. It also announced uninterrupted supply with price certainty for May.
The numbers reflect a recovery already underway. As a media outlet reported, gas consumption in Morbi rose from around 0.36 million metric standard cubic metres per day serving 83 units on March 31 to approximately 2.70 mmscmd serving around 290 units by April 22. GGL projects that figure will climb to between 6 and 7 mmscmd serving 675 to 700 units by May.
Officials are now watching international PNG prices closely. June will bring another round of purchases for the cluster, and stability in global markets will be key to keeping the recovery on track.
Also Read: Morbi’s Ceramic Factories Go Dark As War Chokes Gas Supply https://www.vibesofindia.com/morbis-ceramic-factories-go-dark-as-war-chokes-gas-supply/
