Indian media recently reported that 60% of ceramic companies in Morbi, India have resumed production. It is estimated that Morbi's natural gas consumption will reach 5 million cubic meters per day by the end of June.

It is reported that the local government will lower the gas price for Morbi ceramic production area, with natural gas prices falling to 2.33 yuan/m³ and propane gas prices falling to 1.94 yuan/m³. At the same time, the Gujarat government has allocated 27.88 million yuan to subsidize Morbi's natural gas use.

Image source: MoneyControl News

60% of ceramic companies have resumed production, with daily gas consumption reaching 5 million m³

Affected by the new crown pneumonia epidemic, India implemented a nationwide lockdown from March 25, and the lockdown ban was extended three times to May 31. During the lockdown, India's natural gas demand fell sharply. However, after the gradual lifting of the lockdown, with the resumption of work and production, Gujarat's natural gas demand has also begun to pick up.

Nilesh Jetparia, chairman of the Morbi Ceramics Union, revealed that 60% of Morbi's ceramic factories have resumed production, but the output is still limited. Nilesh expects that by the end of June, 70% of Morbi's ceramic factories will resume production, and Morbi's natural gas demand will rise to 5 million cubic meters per day.

Image source: The Times of India

Before 2019, Morbi used coal gasification furnaces to produce ceramic tiles, causing serious pollution to the local air. In March 2019, the National Green Tribunal, a central agency in India, issued an injunction prohibiting ceramic companies in the Morbi-Wankaner area from using coal gasification technology for production, and ordered the Gujarat Pollution Control Board to shut down all local gas generators. Under the government's mandatory control, all Morbi's ceramic factories switched to natural gas for production.

According to the Times of India, due to the huge demand for natural gas in the Morbi ceramic production area, the supply of natural gas in Gujarat reached 9.05 million cubic meters per day in the fourth quarter of the 2019-2020 fiscal year (December 2019 to March 2020). Gujarat's natural gas companies therefore earned a net profit of 2.5 billion rupees (about 230 million yuan), an increase of 115% over the same period in 2019 (1.17 billion rubles); as of March 31, net sales were 27.22 billion rupees (about 2.53 billion yuan), an increase of 38.6% over the same period last year.

It is understood that 65%-70% of the natural gas consumption in Gujarat is consumed by the Morbi ceramic factory.

Gas price drops to 2.33 yuan/m³, ceramic enterprises receive 27.88 million yuan in subsidies

Currently, the price of natural gas in India is about 29.5 rupees/m³ (about 2.74 yuan/m³), and the price of propane gas is 24.5 rupees/m³ (about 2.28 yuan/m³).

Relevant Indian government officials said that the Gujarat Province will reduce the gas price for Morbi ceramic enterprises from July, with a reduction of 15%. After the reduction, the prices will be about 2.33 yuan/m³ and 1.94 yuan/m³ respectively.

In addition, according to the Indian Business Standard, Gujarat Administrative Minister Vijay Rupani also announced that the Gujarat government will allocate 140 billion rupees (about 13.012 billion yuan) to help the economy, including tax cuts for the real estate and automobile industries, as well as subsidies and capital investment in industries hit by the epidemic. The ceramic producing area of ​​Morbi has received 300 million rupees (about 27.88 million yuan) to subsidize the cost of natural gas.