Industrial consumers says MGL charges heavy unlike GAIL

Nisha Das
04 December 2003

Mumbai: The industrial consumers of Mahanagar Gas Ltd (MGL) are reeling under the heavy rates that MGL is charging them for gas as they are unable to compete with their competitors in the neighbouring Gujarat.

Gas Authority of India Ltd (GAIL) sells natural gas in Gujarat at Rs 3.55 per standard cubic metre (SCM) compared to MGL's charges of Rs 11.85 per SCM to Mumbai's consumers, both industrial and domestic.

MGL has also increased its prices by 57 per cent between December 2001 and February 2003. The Maharashtra government has admitted that MGL's pricing is high but it has failed to act despite several representations by industrial bodies. On the contrary, it has permitted MGL to enjoy an interest free sales tax loan of Rs 12.05 crore from the Maharashtra government during 2001-02.

The state government has granted an interest-free deferral of sales tax for a period of 13 years commencing from 1 April 1996 to 31 March 2009 on sale of natural gas to MGL. MGL is a joint venture between British Gas, which has a 48-per cent stake, and GAIL.

N D Shetty, chairman and managing director, Haldyan Glass, one of MGL's customers, says the industrial units located in Ankleshwar and Baroda in Gujarat pay Rs 3.55 per SCM (including sales tax) for natural gas against Rs 10.22 per SCM (excluding sales tax) charged by MGL. Besides paying higher prices they get gas with a calorific value of 8,500 Kcal whereas their competitors in Gujarat get gas of 10,000 Kcal.

The city-based Forum of Natural Gas Industrial Consumers (FNGIC) says industrial units located in Ghaziabad, Uttar Pradesh, are allotted gas by GAIL at a basic price of Rs 2.85 plus transportation cost of Rs 1.898 per SCM even though the gas traverses 1,000 kms through the HBJ pipeline originating from Bombay High and processed through the Hazira terminal link. On the other hand, MGL supplies consumers in Mumbai from Bombay High which is next door, at Rs 10.22 per SCM, which comes to Rs 11.80 paise with taxes.