MP Industries Grapple with PNG Supply Restrictions Amid Global Tensions
Industries throughout Madhya Pradesh are preparing for increased operational expenses and potential production modifications following a directive that limits piped natural gas (PNG) supplies to industrial and commercial consumers. The restriction caps supply at 80% of their average gas consumption over the previous six months. This measure is designed to redirect and prioritize domestic gas supplies in response to disruptions linked to the ongoing conflict in the Middle East.
City Gas Distributors Implement Directive Across Industrial Hubs
City gas distributors in key industrial centers have commenced enforcement of the order. In Indore and adjacent regions, Aavantika Gas Limited has notified industrial clients that the limitation will become effective from 6 am on March 12, adhering to the ministry's order dated March 9. Similarly, in the industrial zones of Dewas and Bhopal, GAIL has issued comparable communications to industrial consumers.
According to the notification, gas supply to industrial and commercial customers will be confined to 80 percent of their past six-month average consumption, contingent upon operational availability.
MSME Operations at Risk Across Major Industrial Clusters
Industry representatives indicate that the constraints could affect operations in several clusters, including Sanwer Road, Palda, Kila Maidan, and Polo Ground in Indore, where thousands of micro, small, and medium enterprises (MSMEs) operate.
Yogesh Mehta, president of the Association of Industries in Madhya Pradesh (AIMP), emphasized that a substantial segment of MSMEs depends on PNG as a primary energy source. "Confectionery, plastic, and various MSMEs utilize PNG supply. Now it will be capped at 80 percent of their average usage over the past six months, with any additional consumption subject to heavy pricing. For MSMEs, it will be unfeasible to bear such costs, meaning the capping will impair production capacities," he explained.
Industry bodies approximate that around 4,000 MSMEs function across Indore's major industrial areas, with roughly 15 percent of these units employing PNG for manufacturing processes such as heating, processing, and packaging.
Global Tensions Exacerbate Industrial Pressures
Girish Mangla, director of the Association of Industries Dewas, noted that the supply restrictions compound the pressures industries are already enduring due to global tensions. "The Iran-Israel conflict has left industries scrambling for raw materials, and the cascading impact is substantial. The reduction in PNG supply to industries will further disrupt industrial operations," he stated.
A communication dispatched by GAIL to industrial customers in Dewas clarified that the restriction has been imposed in light of the ongoing Middle East conflict and the ensuing supply uncertainty. Referencing the Gazette notification issued by the petroleum ministry, the letter informed industries that gas supply to all industrial and commercial customers would be limited to 80 percent of their past six-month average consumption.
Pricing Structure and Operational Challenges
Industries have been instructed to immediately restrict gas drawal within this limit. The communication also cautioned that any consumption exceeding the restricted quantity would be invoiced at significantly higher spot market prices.
An official communication sent to PNG consumers in Indore specified that base gas prices for industrial and commercial users would rise by Rs 1 per standard cubic metre for consumption within the 80 percent limit. Consumption beyond that threshold would be billed at the actual upstream supplier price.
"Beyond the 80 percent limit, gas will be billed at the actual upstream price, which is linked to spot market rates and could approximate $22–23 per MMBTU, translating to nearly Rs 96 per SCM excluding taxes," the communication detailed.
Industry Responses and Adaptation Strategies
Dinesh Mishra, a senior executive at a film packaging company in Pithampur, mentioned that industries might need to opt for premium pricing to sustain full operations. "We will have to pay the premium pricing to secure 100 percent supplies for smooth operational continuity. This would entail an additional cost of at least Rs 1,000 per day due to the elevated PNG price, but at least we are receiving uninterrupted supplies, which will assist industries in maintaining operations," he remarked.
Industries in the Mandideep industrial area near Bhopal have also been impacted by the curbs. Rajeev Agrawal, president of the Association of All Industries, Mandideep, observed that the restriction has generated operational difficulties for several units.
"GAIL has capped the PNG supply to industries at 80 percent of the past six months' average consumption. Numerous industries experience fluctuating production cycles, so their current requirement may surpass the past average. This restriction has negatively affected several units," Agrawal added.
Long-term Implications for Energy Choices
Manufacturers highlighted that many units had transitioned to PNG in recent years due to its cleaner and operationally efficient nature compared to furnace oil or coal. However, the current restrictions may compel some industries to reevaluate energy options or reduce output if the limitations persist.
The situation underscores the broader challenges faced by Indian industries amid global geopolitical tensions, with potential ramifications for production capacity, cost structures, and energy sustainability in the region.
