Gujarat Energy Ltd (GEL), India's largest city gas distribution company, is exploring the establishment of dedicated port infrastructure in Gujarat for importing and storing propane. According to reports from The Hindu BusinessLine, the company has initiated discussions with suppliers including Qatar Energy and Saudi Aramco as it seeks to diversify its fuel portfolio and retain industrial customers. The company is evaluating the construction of an import jetty and storage tanks near Morbi, India's largest ceramic manufacturing hub, with officials stating they are very interested in setting up their own infrastructure for import and storage without hindrances.
The strategic shift comes as GEL faces intensified pressure from propane competition in the Morbi market. As reported by The Hindu BusinessLine, Mori gas volumes nearly halved from 3.35 million metric standard cubic metres per day (MMSCMD) in Q3 FY25 to 1.68 MMSCMD in Q3 FY2026. The company had first announced plans to enter the propane business last year after witnessing steady erosion of natural gas demand in Morbi, which accounts for 80-90% of India's ceramic tile production. At the time, falling global LPG prices made propane significantly cheaper than natural gas, prompting several ceramic manufacturers to switch fuels.
The vulnerability of the market was exposed during the West Asia crisis earlier this year, when supply disruptions forced Gujarat Gas to invoke force majeure on industrial supplies. According to The Hindu BusinessLine, more than 700 ceramic units in Morbi were forced to suspend operations for close to a month after natural gas supplies dried up, with gas consumption in the cluster dropping to just 0.36 MMSCMD by the end of March. Since supplies resumed from mid-April, volumes have rebounded sharply, with gas consumption climbing to 7.8 MMSCMD by late May and the number of gas-consuming units increasing more than eight-fold to 675.
For GEL, the propane venture represents more than a new revenue stream, as the company believes offering both natural gas and propane would reduce the incentive for industrial consumers to migrate to rival suppliers when fuel economics change. As reported by The Hindu BusinessLine, GEL currently serves more than 4,400 industrial customers across Gujarat and adjoining territories, with industrial consumers accounting for more than half of the company's overall gas sales. The company had targeted capturing about 25% of Morbi's propane demand, equivalent to roughly 1.3 MMSCMD in gas-equivalent volumes.
