Gujarat Gas, IOC sign MoU to broaden scope and accessibility of energy solutions for consumers

Gujarat Gas (GGL) notified the stock exchanges on Tuesday that the company has signed a non-binding memorandum of understanding (MoU) with Indian Oil Corporation (IOC) to broaden the scope and accessibility of energy solutions for consumers.

This significant alliance between the two major players in the energy sector is set to deliver an extensive range of products and services throughout GGL’s authorised areas, the company said in an exchange filing.

Some of the key highlights of the agreement include IOC providing liquid fuels, automotive lubricants, greases and specialties at GGL outlets and GGL setting up a CNG mother facility at IOC outlets.

Gujarat Gas shares were trading over 2.5% lower on Tuesday while IOC shares were trading higher by over 1%.

Last month, Gujarat Gas had said it will invite expression of interest (EoI) from the ceramic customers located in its authorised areas in the districts of Morbi and Surendranagar to provide clarity on the natural gas price projections. The company had pointed out that the ceramic cluster in these districts is one of the largest in the world and accounts for a whopping 90% of India's ceramic products market share.

GGL pointed out that natural gas continues to be one of the preferred fuel for ceramic customers on account of its inherent benefits that include it being environment friendly and having an uninterrupted supply through pipeline network with no logistics requirement. GGL’s pipeline network is connected with almost all the ceramic customers in the area, it said.

“Typically for the ceramic products, the fuel cost consists of about 30% of the end product cost and hence it is essential for the manufacturers to have a fair estimate of the fuel price projections to avoid any major shocks,” it had said.

Shares of Gujarat Gas have gained over 15% since the beginning of the year. The stock has risen over 18% in the last one year.