Gujarat Energy Ltd (GEL), India’s largest city gas distribution company and one of the country’s biggest importers of liquefied natural gas (LNG), is exploring the setting up of dedicated port infrastructure in Gujarat for importing and storing propane.

They have also initiated discussions with suppliers including Qatar Energy and Saudi Aramco as it seeks to diversify its fuel portfolio and retain industrial customers.

“We are talking to various ports for setting up the infrastructure dedicated for us. In the meantime, we have already initiated discussions with various counterparties for import of propane like Qatar Energy, Saudi Aramco and others,” said officials of the company that was earlier known as Gujarat Gas Ltd (GGL).

The company is evaluating the construction of an import jetty and storage tanks near Morbi, India’s largest ceramic manufacturing hub, which has emerged as the focal point of a growing battle between natural gas and propane as industrial fuel.

“We had discussions on draft contracts with various companies, but as far as infrastructure is concerned, we are very much interested in setting up our own infrastructure so as to be able to import and store propane without any hindrances. We are looking at setting up port facilities close to Morbi. We are in discussions with port authorities in Gujarat,” the officials added during an earnings call with investors earlier this week.  

Officials said the company remains committed to expanding its propane business and views dedicated import and storage infrastructure as critical for ensuring reliable supplies and competitive pricing. “It is setting up an import jetty and storage tanks. Propane business we are seriously evaluating,” the officials said. 

The move marks a significant strategic shift for GEL, which has traditionally focused on supplying piped natural gas (PNG) but is increasingly positioning itself as an integrated energy supplier capable of offering multiple fuels to industrial customers. 

The company had first announced plans to enter the propane business last year after witnessing a steady erosion of natural gas demand in Morbi, which accounts for 80-90 per cent 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.

Officials said that propane remains a competing fuel, and the near-term outlook for natural gas demand in Morbi remains stable.

“So on propane, I think at least in the short to medium term, we don’t see propane coming back to normal levels. So we are reasonably sure of a good amount of sales of gas in the Morbi market. And if things get to normal, we will again likely see a dip in spot prices as well. So I think we are in a good position to compete with propane whenever it comes. So if propane comes back, so would gas. So I think we’ll be in a good position to compete. But as of now, for the short and medium term, we see a good amount of sale of gas in Morbi,” the management said.

The pressure on GEL intensified as Morbi gas volumes nearly halved from 3.35 million metric standard cubic metres per day (MMSCMD) in the third quarter of FY25 to 1.68 MMSCMD in the third quarter of FY 2026.

Even a decline in spot LNG prices failed to arrest the shift as propane remained economically attractive for industrial consumers. The vulnerability of the market was further exposed during the West Asia crisis earlier this year.

Supply disruptions forced Gujarat Gas, as the company was then known, to invoke force majeure on industrial supplies while available natural gas was diverted towards priority sectors.

More than 700 ceramic units in Morbi — accounting for nearly 80 per cent of India’s ₹65,000-crore ceramic tile industry — were forced to suspend operations for close to a month after natural gas supplies dried up.

The disruption dragged gas consumption in the cluster down to just 0.36 MMSCMD by the end of March, with only 83 gas-consuming units remaining operational. Since supplies resumed from mid-April, volumes have rebounded sharply.

Gas consumption in Morbi climbed to 7.8 MMSCMD by late May, while the number of gas-consuming units increased more than eight-fold to 675. Industry participants, however, said many ceramic manufacturers have shifted to shorter-duration fuel contracts amid continuing uncertainty over fuel availability and pricing.

Against this backdrop, GEL sees propane not merely as a competing fuel but as an opportunity to retain customers within its ecosystem. The company believes that offering both natural gas and propane would reduce the incentive for industrial consumers to migrate to rival suppliers when fuel economics change. 

When it first unveiled the propane strategy, the company estimated Morbi’s total fuel consumption at around 7-7.5 MMSCMD in gas-equivalent terms, with propane accounting for nearly two-thirds of the market.

It had targeted capturing about 25 per cent of Morbi’s propane demand, equivalent to roughly 1.3 MMSCMD in gas-equivalent volumes. 

GEL currently serves more than 4,400 industrial customers across Gujarat and adjoining territories, with key industrial markets including Morbi, Dahej, Ankleshwar, Vapi, Surat, Rajkot and Valsad. Industrial consumers account for more than half of the company’s overall gas sales.

For GEL, the propane venture represents more than a new revenue stream. It is an acknowledgement that in industrial markets such as Morbi, the competition is no longer between gas distributors alone, but between fuels themselves.

Published on June 6, 2026