To offset a slump in its core Morbi-ceramics-business, Gujarat Gas Ltd (GGL) — one of the biggest city-gas distribution companies — is increasingly leaning on a bold propane-play and its expansion into new industrial hubs in Gujarat and Maharashtra.
The management of Gujarat Gas highlighted its ambitions to tap into under-penetrated industrial clusters through its expanding steel-pipeline network. They pointed to geographic expansion in areas such as Ahmedabad Rural, Dadra and Nagar Haveli (DNH), and parts of Thane, which is expected to add 2–3 lakh SCMD of industrial gas sales over the next 18 months. “If you look at some of the Geographical Areas (GAs) where we are planning to reach — like Ahmedabad Rural, DNH, and some portion of Thane — with our steel pipeline, we are expecting a good amount of volume increase,” the management said during a recent earnings call.
At the same time, with spot LNG and crude prices softening, Gujarat Gas has reduced industrial gas tariffs by ₹3.25/SCM (effective August 1, 2025) to remain competitive. However, acknowledging that demand in the ceramic cluster of Morbi may stay subdued in the near term, the company has complemented its pipeline-led expansion with a strategic push into propane. Management clarified that this move is not meant to replace natural gas, but to regain customers who shifted away due to commodity price volatility — thereby strengthening Gujarat Gas’ position across both existing and newly developing industrial markets.
The company said it is in advanced negotiations with international propane suppliers, evaluating both spot and long-term supply agreements. It is not only in discussions with Pipavav and Kandla ports for handling propane imports, but is also engaging with fleet service providers to arrange last-mile transportation of propane.
Gujarat Gas expects LNG supply tightness to persist for 18–24 months, and sees propane as a critical “bridge fuel” to retain industrial customers in its ecosystem. Importantly, the company has clarified that the propane initiative is not aimed at existing PNG customers, but designed to re-capture the industrial units—especially in Morbi—that migrated to propane as international LNG prices surged over the past year. “The idea is not to market propane to our existing customers. It is to bring in the customers that we have lost with propane,” the management told investors.
Even so, the company believes several high-quality ceramic manufacturers in Morbi will continue to favour natural gas for superior heating control and product quality—an important supporting factor as the company navigates the transition phase. In FY 2024-25, Gujarat Gas sold on average 9.62 MMSCMD (million metric standard cubic meters per day) of natural gas of which 5.03 MMSCMD was industrial PNG volumes with industrial hubs in Morbi, Dahej, Ankleshwar, Vapi, Surat, Dahej, Valsad, Rajkot being the key growth drivers for this segment.
During Q2 FY26, Gujarat Gas’ Morbi sale volumes fell sequentially to 2.13 MMSCMD, down from 2.51 MMSCMD in Q1, partly impacted by the Janmashtami festival and ongoing fuel switching. Non-Morbi volume, however, edged up to 2.22 MMSCMD, demonstrating resilience outside the ceramic belt. The weakness is not new. In Q1 FY26, the company had already reported a six percent QoQ decline in total industrial volume to 4.71 MMSCMD, with Morbi dropping from 2.87 to 2.51 MMSCMD. The company cut industrial gas prices by ₹3.25/SCM from August 1, 2025, following a dip in global LNG and crude prices, though it cautioned that near-term Morbi demand revival remains unlikely.
The medium-term anchor of Gujarat Gas’ strategy lies in its expectation that the global LNG market is headed towards a multi-year supply surge, which will eventually re-balance prices. Management noted that US LNG exports have surged, including over 145 cargoes shipped in October, and expects incremental volumes from new Qatar liquefaction projects by late 2026. The company is also watching Europe’s planned 2027 ban on Russian LNG, which could further redirect supply and moderate prices. Gujarat Gas believes that by end-2027, the LNG market will present “reasonable” price levels—strengthening the case for natural gas in industrial clusters like Morbi once again.
Published on November 24, 2025
