During the past fortnight, over 1000 workers employed in the small-scale industries in South Gujarat have been laid off, as industrial units fight for survival, following a 60 percent cut in natural gas supplied under the Administered Pricing Mechanism (APM).
Over 33 industrial units — most of whom are glass and ceramic sectors — provide direct employment to over 70,000 people between Vadodara and Kosamba (Surat), are now struggling for survival after Gas Authority of India (GAIL) imposed a 60 percent cut in the APM gas supplies from September 16, 2014 and provided “costlier” spot RLNG (Re-gassified Liquefied Natural Gas) in it’s place.
“We have already closed down one of our two furnaces and have retrenched close to 500 workers,” said Dinesh Gupta, managing director, Pragati Glass Pvt Ltd which has imposed a 80 tonnes cut in it’s annual production of 170 tonnes of glass.
Gupta was in the city on Monday to chair a crucial meeting of members of South Gujarat Small Gas Consumers Association (SGSGCA), who have been adversely affected by the cut. Those present at the meeting include representatives of Gujarat Borosil — the only producer of solar glass in India— Piramal Glass, Alembic Ltd, Videocon Industries, Transpek-Silox, Orient Bell Ltd, Latin Rasayani Pvt Ltd, Haldyn Glass and others.
Members who were present at the meeting said RLNG supplied to them was four times costlier (Rs 45 per standard cubic meter per day or SCMD) than the APM gas and they were starting at a closure or a possible relocation within the next two to six months.
Piramal Glass is yet another big name which has partially shut operations. “We have shut one of the nine furnaces. Over 400 persons have been laid off. We are now using the present capacities to fulfil our export commitments,” said Constancio Menezes, General Manager (Supply Chain Management) of the company that employs close to 6000 people.
Some of the units in South Gujarat were also reconsidering a relocation. “Apart from scaling down, we are only left with one other choice, that of moving out our operations outside Gujarat. Now it does not make sense to continue manufacturing in Gujarat,” Tarun Shetty, managing director of Haldyn Glass Ltd told The Indian Express after the meeting.
Haldyn Glass which manufactures 300 tonne of glass annually has scaled down it’s operations by 20 percent.
In the meeting the (SGSGCA) has also planned to once more approach the central government. “We cannot survive in this kind of environment and so we plan to once again approach the Centre. After using such costly gas our products cannot withstand competition from clusters like Faridabad (where the natural gas is being allocated at Rs 15 SCMD) and Chinese products,” said Dinesh Gupta who is also the president of SGSGCA.
The members of SGSGCA also felt that the Gujarat government should support the association and help them before they are forced to shut down. “Once the furnaces cool down, it will require a huge amount of capital to restart them. So we have to ensure that the furnaces do not shut down,” said SS Singh. deputy general manager (Co-Gen, Power Dist & Water Plant), Alembic Limited.
“At a time when the NDA government is laying out a red-carpet for attracting FDI and are launching programmes like Make-in-India, it is equally important for the government to take care of the existing industries,” said Ashok Jain, whole-time director of Gujarat Borosil Ltd which is the only producer of solar glass (used for solar panels, solar thermal heaters and green houses) in India.
Meanwhile, in a release sent earlier GAIL had stated, “In pursuance to the directives issued by the Ministry of Petroleum and Natural Gas, GAIL has informed industries in South Gujarat about the restriction in supply of natural gas to non-Core sector in lieu of the supply of Administered Pricing Mechanism (APM) Gas to CGD sector for use of natural gas in domestic households (PNG) and transport sector (CNG) in the larger interest of the people. Considering the requirement of Gas to other industries, GAIL has offered to supply equivalent amount of alternate gas so that the production of such industries do not suffer. Some of the affected parties have already availed GAIL’s offer to utilize alternative gas in view of the reduced quantity of APM gas. The additional gas being supplied to domestic and transport sector will enable the Government to reduce subsidy burden on account of LPG and will result in substantial saving in outgo of foreign exchange for import of LPG as well as crude oil.”