Hike in HBJ gas rates will hit Gujarat hard

GANDHINAGAR: The Centre''s plan to reportedly double the rates of gas being supplied through the HBJ pipeline from Rs 2,800 per 1,000 cubic metre has created a flutter in Gujarat.
This may considerably add to the difficulties of the state''s sick fertiliser industry and the Gujarat Electricity Board. Despite chief minister Narendra Modi''s recent representation to Prime Minister AB Vajpayee and Union petroleum minister Ram Naik against the move, the Centre is adamant.
"The Gas Authority of India Ltd, as the monopoly supplier, charges an inequitous rate from us.Apart from the Rs 2,800 per cubic metre, it takes away another Rs 1,150 per cubic metre as transportation cost. The latter is taken, though the source of the HBJ pipeline gas is Gujarat. We had represented to the Centre to waive the charge and instead ask every state to pay on the basis of distance. The Union petroleum ministry just refused to oblige", says the CM''s economic adviser SK Shelat.
But with the move to fix a new rate, between Rs 5,000 and Rs 6,000 per cubic metre, another chapter may be added in the tense relations between the state and the Union petroleum ministry. To maintain the Centre''s complete grip over gas supply, Ram Naik has ensured that the Gujarat Gas Act does not come into effect. Providing state control over gas distribution and tranmission through a regulatory authority, the Act could not be notified because he sent it for Presidential reference.
Gujarat is one of the main consumers of gas. Of the 33 million metric cubes per day (MMCD) being supplied all over India via the HBJ pipeline, the state''s share is mere six MMCD. Such premier PSUs like the Gujarat State Fertiliser Corporation and the Gujarat State Narmada Fertiliser Corporation, already reeling in trouble because of cut in Central subsidy for fertiliser, might be forced to be permanently in the loss. As for the GEB, the power being supplied by gas-based independent power plants will cost more.
"The Fertiliser Association of India has estimated, the industry as a whole will suffer a loss of Rs 6,000 crore. Gujarat-based plants will suffer", says Shelat. "Three gas-based IPPs - G-Pec, Essar and Gipco - together supply nearly 1,100 MW to the GEB. Our estimate is the GEB will have to pay about Re 1 per unit more, and pass on the burden to the consumer. The industry, in turn, will get power at the cost of Rs 5 per unit as against Rs 4 currently. It''s a bleak future for the state''s economy."
The CM has brought all this to the Centre''s notice, yet there is no response. While the oral representation has been made, a formal protest may be sent as soon as the Union petroleum ministry comes up with a concrete proposal to raise the gas price. What has prompted GAIL to act thus is MNC Cairn Energy''s high price of gas- Rs 7,000 per cubic metre- being supplied from the fields off Gujarat coast. "Cairn Energy is taking advantage of gas scarcity. Why should GAIL also follow?", asks Shelat.