Madhya Pradesh Industries Confront Severe Energy Squeeze as PNG Supply Slashed to 65%
Industrial units across Madhya Pradesh are facing a critical energy crisis, with piped natural gas (PNG) supply now restricted to just 65 percent of average consumption, a sharp reduction from the previous 80 percent cap. This drastic cut is directly linked to global liquefied natural gas (LNG) supply disruptions stemming from the ongoing West Asia geopolitical tensions, forcing manufacturers to implement production cuts and absorb skyrocketing fuel costs.
Production Capacities and Industrial Margins Under Severe Pressure
Manufacturers report that the reduced gas allocation is severely impacting production capacities, particularly in key sectors such as pharmaceuticals, food processing, plastics, packaging, engineering, and chemicals. These industries rely heavily on PNG for essential operations including boilers, heating systems, and continuous manufacturing processes. The production cuts are now squeezing already thin margins and disrupting manufacturing schedules across the state.
Madhya Pradesh serves as a major hub for Micro, Small, and Medium Enterprises (MSMEs), with thousands of units operating from prominent industrial clusters like Pithampur, Dewas, Mandideep, and Malanpur. A significant portion of these enterprises depend on PNG and other fuels for daily operations, making them highly vulnerable to the current supply constraints.
Financial Strain and Soaring Fuel Prices Cripple Operations
The financial impact on industries is profound. Under normal conditions, the contractual price of PNG is approximately Rs 72 per Standard Cubic Meter (SCM). However, consumption beyond the newly imposed 65 percent cap is being billed at volatile spot rates, which have surged to around Rs 125 per SCM or higher, with prices continuing to climb. This steep increase compounds existing challenges, including elevated raw material prices and rising logistics costs.
Rajeev Agrawal of the Mandideep Industrial Association emphasized the dual burden: "Industries are already contending with higher raw material prices and logistics costs. The reduction in PNG supply coupled with the sharp spike in fuel prices is directly hampering production and making operations extremely difficult for numerous units."
Official Communications and Force Majeure Declarations Highlight Crisis
The restrictions follow official notifications citing geopolitical disruptions. In a letter dated March 19 to the Association of Industries Dewas, GAIL stated that overdrawn quantities of PNG for industrial consumers would now be calculated based on spot prices due to the geopolitical issues affecting LNG shipments. Additionally, industrial units have received communications from a PNG supplier declaring a force majeure condition, citing supply disruptions from upstream LNG suppliers triggered by the Middle East crisis.
The communication explicitly outlined that, effective March 20, gas supply to industrial and commercial consumers would be limited to 65 percent of their average consumption, calculated from the past six months' usage data.
Industry Leaders Warn of Potential Shutdowns and Urgent Appeals for Relief
Girish Mangla of the Association of Industries Dewas highlighted the enormous pressure on manufacturers: "PNG rates have increased further, and this represents a huge burden on industries. With raw material prices and logistics costs already elevated, such a sharp spike in PNG prices has left industries shattered."
Yogesh Mehta, president of the Association of Industries in Madhya Pradesh (AIMP), issued a stark warning about the sustainability of operations: "Industries cannot function under these conditions. We acknowledge this is a geopolitical situation, but it is devastating industries. If the situation persists, many units may be compelled to shut down after March."
Industrialists stress that consistent and predictable energy supply is critical for maintaining production schedules, especially for MSMEs operating on narrow margins. They have urgently appealed to authorities to restore the previous 80 percent supply cap and provide immediate relief measures to prevent widespread disruption in industrial activity and potential job losses across the state.
