A hike in the price of industrial gas by Gujarat Gas Ltd will put an additional burden of over Rs 100 crore per month on ceramic units in Morbi, the country's largest cluster, industry representatives said on Tuesday.
Gujarat Gas, which supplies natural gas to ceramic manufacturing units in Morbi in Gujarat's Saurashtra region, on Monday announced a rise in industrial gas price under its agreement with effect from Tuesday.
The company announced a hike in price of industrial gas by about Rs 5 per square cubic metre (Rs 4.37 plus tax) for its customers in ceramic and sanitaryware industry in Morbi and Surendranagar.
This, the firm said, is necessitated due to "substantial increase" of natural gas price in international markets.
The industry consumes 70 lakh cubic metres of gas every day, thereby adding a burden of Rs 100 crore monthly on it, industry representatives said.
They said a sudden increase in the price of gas will adversely affect the units which have already taken orders, especially export orders which they are under obligation to fulfil.
Morbi Ceramic Association President Nilesh Jetpariya said the hike will increase production cost for the units by 7-8 per cent, and may force nearly 30 per cent units operating in Morbi to stop production.
He said fuel accounts for nearly 35-40 per cent of total production cost, and a sudden hike may prove to be unbearable to many units as they will be forced to sell products at a loss.
"We have been appealing to Gujarat Gas and the state government to at least give us a month's notice before raising the price of natural gas, but it always comes at a short notice that adversely impacts the industry," Jetpariya said.Around a thousand ceramic units in Morbi consume 70 lakh cubic metres of natural gas on a daily basis, he said.