Gujarat blames centre for power woes

March 8th, 2008 - 6:49 pm ICT by admin  

Ahmedabad, March 8 (IANS) The Gujarat government blamed the central government Saturday for adopting a fuel price mechanism which has led to a steep rise in power rates and a crippling effect on industrial production in the state. State Minister for Industries and Energy Saurav Patel said the centre’s new pooling price mechanism had caused a 36 percent increase in the price of liquefied natural gas (LNG), which inevitably pushed up power costs.

“We cannot be blamed for the situation,” said Patel while addressing the two-day Asian Chemical Leaders’ Summit 2008, organised by the Gujarat Chemical Association here.

He said the state government had entered into long term, fixed price contracts with LNG suppliers. But with the enforcement of the central government’s fuel policy “we were compelled to cancel our deal with gas suppliers that had assured supplies on long term basis at a fixed price. Similarly, we were also compelled to cancel our long term agreement reached with developers of Panna Mukta Tapi gas field.”

Patel was responding to Guruprasad Mahapatra, managing director of Gujarat Alkali Chemicals Limited (GACL) who said because of the high power cost the company was becoming non-competitive. He said the cost of power in the Middle East was one cent per unit while in Europe it was four cents. But GACL was paying seven cents per unit and power accounted for nearly 70 percent of the manufacturing cost.

The minister said the prices of coal, oil and gas were increasing steeply in the global market. With the central government’s fuel price policy also pushing up energy costs, there was no alternative but to find new solutions to lower fuel cost.

One such solution is to enter into long term fixed price agreement with pithead power generators. Many parties have secured coal blocks in Orissa and Chattisgarh and it made sense to enter into a long-term supply arrangement on fixed price basis, Patel said.

He said the Gujarat Urja Nigam Limited has successfully tied up with pithead power generators. Big industrial units, especially the chemical ones in Gujarat, should try and clinch similar deals.

The minister said the Gujarat government was also giving final touches to introduction of a policy of cluster development for chemicals and petro-chemicals. This was to ensure that these units were located closer to the key raw material suppliers like GACL instead of being widely scattered as now.

Dahej in south Gujarat is being developed as a chemicals and petro-chemicals hub. “We are in the process of identifying other areas where such clusters can come up.” The government will welcome big industrial units like Reliance to adopt a cluster development approach.

This will result in saving the costs incurred in transport of raw materials like liquid chlorine over long distances. “In fact, we have suggested to the state run units like GACL and the Gujarat State Fertilisers Company (GSFC) which also manufactures chemicals as by products, to maximise their efforts to market their produce within Gujarat beginning from April, in order to save on transport costs which are high.”

Patel said the other important policy on the anvil is a role change for the Gujarat Industrial Development Corporation (GIDC). Hitherto, the corporation’s role was to acquire land and build industrial sheds for prospective entrepreneurs.

But now, the role of GIDC will be to develop a land bank so that investors lose no time in obtaining a site for a venture. The corporation will also provide other infrastructure facilities.

He said the state government, while encouraging the growth of chemical industries in Gujarat, is also committed to protecting the environment.

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