Gujarat Gas Ltd. in a bid to attract new customers and increase its volumes in its industrial segment has invited 'expression of interest' from ceramic customers of Morbi and Surendranagar for purchase of natural gas.
The piped natural gas for the industrial segment accounts for 60.4% of the company's total gas volumes in Q3FY24. Currently, Gujarat Gas supplies more than 4 million metric standard cubic meter of natural gas per day to the ceramic customers of Morbi and Surendranagar area.
With the EoI, the gas distributor expects to add another 3 million metric standard cubic meter of natural gas per day to its existing volumes, which is a rise of 42% from the current supply.
Why Morbi And Surendranagar?
Located in North Gujarat, Morbi is an industrial centric city, also known as the ceramic capital of India. The city, which is in close proximity to Rajkot, contributes to 90% of India's ceramic production, according to Gujarat Gas. The company has a well-established network in Morbi, with infrastructure reaching many industrial areas where the ceramic factories are located.
Gujarat Gas Ltd is India's largest city gas distribution company and currently operates in 44 districts in six states viz. Gujarat, Maharashtra, Rajasthan, Haryana, Punjab, and Madhya Pradesh and the Union Territory of Dadra & Nagar Haveli.
Importance of Ceramic Customers
The ceramic manufacturing process relies heavily on natural gas, with fuel costs accounting for 30% of the total costs. Ceramic manufacturers use natural gas for heating kilns and firing ceramics, as well has for generating heat to glaze the ceramics.
Historically, the city gas distributor has been a major supplier of piped natural gas to the ceramic industry, thereby making them a crucial customer segment for Gujarat Gas.
About The Expression of Interest
In order to further penetrate the company's existing market, Gujarat Gas has invited an "expression of interest" from the ceramic customers in Morbi and Surendranagar area for buying natural gas.
As per the EoI, customers will be required to state the quantity of natural gas that they wish to off-take for the specified time period, according to an exchange filling. Following the requirements, Gujarat Gas will then provide relevant information regarding the pricing of natural gas and tenure of contract. These estimates will help potential customers decide the the quantity of natural gas.
The arrangement is expected to be a mutually beneficial for the customers and the company, Gujarat Gas said in the filing.
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