Rising gas prices strain Nandesari industries, production impact reported

Industries in Vadodara’s Nandesari Industrial Estate are facing increasing cost pressures following a rise in gas prices, along with sharp hikes in key raw materials such as ammonia, sulphur, and solvents.

The combined impact has begun affecting production levels in several units, according to industry sources.

The estate houses around 300 small and large industrial units, of which nearly 200 depend on a continuous gas supply. With Adani Gas revising prices, operational costs for gas-based units, particularly those running boilers, have increased significantly, in some cases nearly doubling.

As per the Nandesari Industrial Association, the current gas supply is being drawn from previously procured stock, which was acquired at lower rates. The association has suggested that existing supplies be billed at earlier prices, while any future increase due to global factors can be considered separately.

Amid the gas constraints, many industries are shifting towards industrial steam connections. Around 70 units in Nandesari have already adopted this alternative. However, this comes with its own challenges, including high initial investment for boiler installation.

On the other hand, steam systems offer certain operational advantages such as space efficiency and reduced manpower requirements.

Gas supply access remains another concern. GAIL currently provides connections only to industries with a daily consumption of 5,000 cubic metres. Local industrialists have proposed a shared model, where multiple units collectively meet the consumption threshold, but no decision has been taken so far. Efforts are also underway with gas authorities in the district to improve supply access.

According to the revised pricing structure, gas rates remain unchanged up to 40% of total consumption. However, consumption beyond this threshold has seen a significant increase—from ₹60 per Metric Million British Thermal Unit of MMBTU earlier to ₹119, later revised to ₹82 per MMBTU following industry representations.

At the same time, the cost of essential raw materials has risen sharply. Sulphur prices have increased from ₹8 per kg to ₹40 per kg, ammonia from ₹8 per litre to ₹30 per litre, and solvents from ₹31 per kg to ₹53 per kg, adding further pressure on manufacturing costs.

Nandesari Industrial Association chairman Babubhai Patel noted that such cycles of cost pressures tend to emerge periodically. Drawing from past experiences, including the Covid period, he emphasised the need for planning and adaptability.

He also advised industries to explore alternatives like steam usage and maintain a balanced approach while navigating the current challenges.