Hindusthan Glass writes to Petroleum ministry expressing concerns over cuts to gas quota

Qatar is India’s biggest supplier of liquefied natural gas accounting for as much as 45% of gas imports into India.

• HNGIL warns gas cuts may disrupt glass manufacturing in India
• Gas shortage may cause supply issues for Pharma and FMCG sectors
• Government offsets gas shortfall with alternate LNG supply routes

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Hindusthan Glass & Industries Limited (HNGIL), India’s largest glassmaker has written to the Ministry of Petroleum and Natural Gas expressing concern about potential cuts in gas supply to industrial units in the wake of the ongoing war in the Middle East. The company said such cuts could disrupt manufacturing capabilities of the glass maker, impacting essential sectors such as pharmaceuticals where glass containers are extensively used. It would also impact other sectors such as Fast Moving Consumer Goods (FMCG) where glass is extensively used for packaging, a copy of letter accessed by Moneycontrol showed.

The development assumes significance as the Indian government has reprioritised gas supply following the force majeure situation arising from the war.  Current priority is being given to retail uses, notably LPG cylinders for households and gas for vehicles. Before the current escalation, 55-60% of India’s Liquefied Natural Gas (LNG) passed through the Strait of Hormuz which has been under a blockade imposed by Iran.

“Any abrupt suspension of gas supply could endanger the structural integrity of the furnaces and may potentially result in uncontrolled fire incidents, or severe damage to plant infrastructure due to sudden temperature fluctuations,” said HGIL’s Chief Strategy & Corporate Affairs Officer, Suraj Mehta in the letter to ministry dated March 11.

“Such an event would lead to significant loss of company assets, disruption of manufacturing capability, and interruption in supply to essential sectors including the pharmaceutical industry and other critical sectors. Further, a sudden stoppage of gas supply would also endanger the lives and livelihoods of our workforce. HNGIL currently employs approximately 4,000 workers and employees, whose employment and safety could be severely impacted if furnace operations are forced to shut down due to lack of fuel supply,” the letter added.

The government has initiated multiple measures to ensure adequate supply of gas. Firstly, the government has been exploring alternate routes for Indian oil tankers which would avoid the risk of travelling through the Strait of Hormuz. Atleast two oil tankers carrying LNG supplies are on their way to India and more such tankers from alternate routes are expected in the near term, according to a senior government official.

The government also announced today that 20% of average monthly commercial LPG requirement will be allocated to industrial and commercial users in coordination with state governments.

“Gas shortfall has been substantially offset through alternative procurement. Large LNG cargoes are arriving on an almost daily basis through alternative supply routes,” said Union Minister for petroleum and natural gas Hardeep Singh Puri in the Lok Sabha today.

“India has sufficient gas production and supply arrangements to sustain this position even in the event of a prolonged conflict. Power generation for every household and for industry is fully protected,” Puri added.

This shortage of natural gas in India was triggered by the decision taken by Qatar last week to declare force majeure and halt production following the strikes launched by Iran on gulf countries.  Qatar is India’s biggest supplier of liquefied natural gas accounting for  as much as 45% of gas imports into India and the disruption has raised alarms over potential spill over effects on domestic fuel availability.