India’s largest city gas distribution company, Gujarat Energy Ltd (GEL) has reported a dramatic revival in gas demand from India’s biggest ceramic cluster at Morbi in Gujarat with consumption jumping more than 20-fold in less than three months between March-May 2026, marking a sharp turnaround for a market where the company had been steadily losing volumes to alternative fuels.
The company — formerly known as Gujarat Gas Ltd — on Monday said the gas consumption from ceramic units in Morbi surged from 0.36 million metric standard cubic metres per day (MMSCMD) in March to 8 MMSCMD by late May. The number of gas-consuming units in Morbi also increased eight-fold, rising from 83 to 710 during this three-month period.
“Morbi ceramic cluster remains our largest partner in the PNG industrial segment. Our successful supply strategy has provided significant support to the ceramic industry in Morbi during the crisis period of March to May 2026. The number of units off taking gas increased from 83 units with gas consumption of 0.36 MMSCMD in March 2026 to 710 units with gas consumption reaching approximately 8 MMSCMD by the last week of May 2026,” Avantika Singh Aulakh, Managing Director of the company told investors on Monday evening.
The sharp swing in volumes comes against the backdrop of extreme disruption earlier this year, when over 700 ceramic units —accounting for nearly 80 per cent of India’s ₹65,000 crore ceramic tile production base in Morbi — were forced to shut operations for close to a month after natural gas supplies ran dry following West Asia-related supply constraints. With fuel unavailable, the cluster’s gas consumption collapsed to just 0.36 MMSCMD by March end.
Month-long contracts
As supplies gradually normalised from mid-April, operations resumed and demand returned swiftly, but on markedly different commercial terms. Industry sources said that the ceramic units, have increasingly shifted to shorter, month-long contracts with GEL for PNG rather than long-term commitments, reflecting continued uncertainty around fuel availability and pricing stability.
The recovery has also come with a steep increase in realisation. The price of PNG supplied to Morbi industrial users has risen from ₹41.6 per scm (standard cubic metres) earlier to ₹75 per scm currently, reflecting tighter supply conditions and higher input costs during the disruption and recovery phase. In comparison, GEL is supplying PNG at ₹68 per scm to non-Morbi industrial customers.
“What we are hearing from our customers is that our sales can reach upto 8.8 to 9 mmscmd in Morbi. So still there is a gap of 10 percent or so (for growth),” the company management said.
Sharp Turnaround
The turnaround comes after a difficult phase for the city gas distributor. During FY26, Morbi gas volumes had already come under pressure as ceramic manufacturers increasingly opted for propane, which had become more economical than natural gas following a sharp decline in global LPG prices. The volumes had nearly halved from 3.35 MMSCMD in the third quarter of FY25 to 1.68 MMSCMD by third quarter of FY26, raising concerns that the company was steadily losing ground to propane in one of its most important industrial markets. Thereafter the average volumes for the fourth quarter of FY26 rose to around 2.02 MMSCMD after PNG prices were slashed.
The rebound nevertheless marks a significant relief for GEL, which had been facing pressure to defend market share in a region that accounts for a substantial portion of industrial gas consumption. The resurgence in Morbi comes amid broader efforts by GEL to deepen natural gas adoption across Gujarat following disruptions in global energy markets. Between March and May, the company converted 86 residential societies, comprising around 13,000 households, into fully PNG-connected and LPG-free communities. Commercial connections also expanded sharply, rising from 152 units in March to 527 by late May.