Oil cos’ gas supplies to industrial units in North rise 59%

Oil cos’ gas supplies to industrial units in North rise 59%

New Delhi: Due to shortfall of power availability by 40-45% in Northern India, industrial locations shifted for enhanced commercial gas intake for meeting their heating requirements, creating huge opportunities for oil marketing companies to sell commercial gas to industrial units.

This is evident from the way BPCL, HPCL and IOCL increased their gas supplies to industrial units by 59% from December 2006 to December 2007 in the Northern zone alone.

According to an internal assessment on Gas Supplies Vs. Power Shortage carried out by industry chamber, Assocham, feedback came from oil marketing companies, confirming that North zones’ commercial units gas requirements went up to 24,000 metric tonne (MT) in December 2007 as against 15,000 MT in December 2006.

Key Findings

*Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd. (HPCL) took a lead in bulk supplies of commercial gases to consumers of industrial units in the north zone followed by Indian Oil Corporation Ltd (IOCL)

* Share of BPCL in bulk supplies of commercial gas for industrial unit’s heating requirements by 31December, 2007 stands at 48%, followed by 39% of HPCL and 13% of IOCL

*BPCL and HPCL took the lead in supplying bulk gases to industrial consumers in the northern region because they do not have large distribution networks to supply domestic gases in which IOCL has the monopoly owing to their huge distribution networks; resultantly its market size in supplying domestic LPG continues to be around 57%

* This shift was noticed because of erratic power supplies in all of North India except states like Himachal, Jammu & Kashmir and Uttaranchal; Punjab, Haryana, Delhi, Rajasthan depended heavily on commercial gases to run furnaces, foundries and forging units through industrial gases

* These states relied heavily on commercial gases to meet their melting requirements for forging and foundry units as normal power supplies were cut by almost 55% during the period in the region

*With regard to South Zone, state oil companies like HPCL, BPCL, IOCL supplied gases in bulk to industrial locations in SSI sector and even middle size sectors to the extent of 50,000 metric tonne by 31December, 2007 as against 33,000 metric tonne by 31December, 2006; increase in commercial gas supplies in southern region works out by 50%; power shortages during last one year of calendar 2006 and 2007 are estimated to the extent of 35-40%

* Western Zone’s bulk gas supplies to its industrial locations by 31December, 2007 were estimated at 62,000 MT as against 47,000 MT by 31December, 2006 and the jump in percentage terms is calculated by 34%

* In Eastern Zone, bulk gas supplies were effected to industrial units by 12,000 MT towards 31December, 2007 as against 8,000 MT of 31December, 2006; increase in supplies in the region worked out by 49%

* On an all-India basis, industrial gas supplies by 31December, 2007 were effected to the extent of 148,000 MT as against 103,000 MT of 31December, 2006 and the total increase in gas supply to industrial units at all-India levels is calculated at 44%

* In the absence of regular power supplies, burden on oil companies for supplying industrial gases would continue; refining capacities of downsteam oil companies to be increased so that maximum gas production is possible to meet heating requirements of industrial units particularly in SSI and medium sector