GAIL shuts Pata petrochemical plant on demand, offtake issues

State-owned gas utility GAIL India Ltd has shut its petrochemical plant at Pata in Uttar Pradesh, joining a host of petchem makers who have been forced to shut units as the unprecedented nationwide lockdown evaporated demand and created transportation hurdles.

GAIL first cut capacity of the 400,000 tonnes a year polyethylene plant at its Pata complex by half as two-thirds of trucks that used to transport finished products to users stopped operations soon after the lockdown was imposed, sources privy to the development said.

But with polymers it produces filling every inch of space in its godowns, GAIL last week shut the plant, they said, adding the company continued to operate the LPG production unit at Pata to meet the cooking fuel demand in the country.

Polymers/polypropene finds usage in a broad range of industries such as textiles, packaging, stationery, plastics, aircraft, construction, rope and toys.

The firm had previously shut the 210,000 tonnes a year high density/linear low density polyethylene swing plant since March 25.

Several petrochemical plants in India have been forced to shut down since a nationwide lockdown was imposed from March 24 until April 14 to fight the fast spreading coronavirus outbreak.

The lockdown shut factories that made plastics products and packing material using polymers produced at plants such as GAIL's Pata unit. Also, the petchem units faced labour shortage as migrant labourers returned home.

The lockdown has also hit trucking operations, hampering transportation of finished goods.

Major producers including Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL), and Haldia Petrochemical Ltd (HPL) have reduced production or shut units in an effort to balance inventory against the sharp drop in domestic demand.

While IOC is on the verge of shutting down its 800,000 tonnes a year cracker at Panipat in Haryana due to low demand, HPL has closed its steam cracker and polymer units, sources said.

BPCL has reduced operating rates at its refinery-linked petrochemical units in Kochi and Mumbai to less than a third.

ONGC Petro Additions (OPAL) is reducing operating rates at its high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE) production lines at Dahej in Gujarat.

Mangalore Refinery and Petrochemicals Ltd (MRPL) shut its 440,000 tonnes polypropene (PP) plant at Mangalore. IOC has also shut its 700,000 tonnes PP plant at Paradip in Odisha.

It was not clear if Reliance Industries, which operates crackers and downstream units producing paraxylene (PX), purified terephthalic acid (PTA), monoethylene glycol (MEG) and polymers, has also reduced operating capacity.

Officials are hopeful that even if the lockdown is not lifted completely, some industries such as petrochemical units will be allowed to resume operations as the material they make is used not just in packing of medicines and medical equipments but also find usage in personal protective equipment (PPE).

It remains to be seen how fast the plants can get back into production considering it may take some time for workers to return and for logistics and transportation to resume normal operations.