PETROCHEMICALS IN INDIA
Current affairs | Economy

Story of Petrochemicals in India

The word ‘petrochemicals’ stands for chemicals and plastics derived from crude petroleum. It belongs to the category of hydrocarbons. Every day we come across one product or the other made of petrochemicals. They range from humble washing powder (detergent) to plush interiors of luxury cruises. Some of the major consumers of petrochemical products are Chemical industry, fertilizers, pharmaceuticals, telecommunication, automobile industry, textiles, packaging, electrical and electronics, and a host of consumer/household goods manufacturers. This write up will give you a clear picture of the whole story of petrochemicals in India.

A brief history of the Indian petrochemical industry

The discovery of oil in Digboi in Assam in 1889 paved the way for the development of the oil industry in India. The oil industry opened up scope for the petrochemical industry. In post-independent India, there were only two manufactures of petrochemicals; Union Carbide (1930s) and NOCIL (1960s).

However, since both these companies had very low capacity plants, the country had to meet its demand for plastics mainly through imports. It was a time when the Government of India was also weighing several options to encourage the manufacture of plastics and chemicals in the country to reduce the country’s dependence on imports and thereby save valuable foreign exchange.

A Novel Idea

The idea of large scale manufacturing of petrochemicals in India got a shot in the arm with setting up of an oil refinery in Vadodara (known as Gujarat Refinery). This refinery started its operations in 1965. Crude oil processing at the refinery has generated a sizeable quantity of “waste” called Naphtha. This “waste” contained a large measure of Olefins (ethylene, propylene, butadiene, synthesis gas etc.) and Aromatics (benzene, toluene, xylenes etc.), which are base materials (in other words known as the feedstock) for the manufacture of polymers, chemicals, fibers, and fiber intermediates.

One of the options before the Government was to put this “waste,” into good use. This step intended to give license to major chemical industries of those days to set up their Naphtha cracker facility so that they start producing petrochemicals. However, the offer was rejected by the industry, as they found it economically unviable. As a result, ONGC itself took up this task and formed its petrochemicals division in Vadodara.

Later on, considering the huge potential for growth in industrial chemicals and consumer products in the country and also to control the falling employment growth rate, the Government of India decided to form a new company with a wider scope of operation than what was envisaged earlier.

Meantime, it had also identified 600 acres of land lying adjacent to the Gujarat Refinery, suitable for the proposed company to start its operations. Soon, the petrochemical division of ONGC was separated from it and registered it with the new name “Indian Petrochemicals Corporation Ltd “(IPCL). That was on the 22nd of March 1969.

Remarkable Growth

Once the land acquisition was complete, the company decided to go in for an Aromatics plant followed by the Olefins plant and its downstream projects. (Products obtained by cracking Naphtha viz.ethylene, propylene etc. are further processed in other processing units which are called downstream units.)The Aromatics plant was commissioned In 1973 to produce Xylenes and Di-methyl Theraphthelete (DMT). Commissioning of the Olefins plant followed in 1978 to produce 1.3 lakh tonnes of ethylene per annum.

Soon thereafter, the downstream projects viz., Polypropylene(PP), Low Density Polyethylene(LDPE), Poly-butadiene Rubber(PBR), Acrilo-nitrile, AcrilicFibre, Vinyle Chloride Monomer/Polyvinyle Chloride (VCM/PVC), Petroleum Resins PR), Ethylene Glycol (EG), Surfactants (LAB) and Dry Spun Acrylic Fibrewent into operation.

For all these projects, technology was provided byUOP, Dow Chemicals, Dupont, Mitsubishi Chemicals, LG Chemicals etc that were the known technology giants of those days. With the growing demand for raw materials to produce plastics, chemicals, and solvents, the company undertook the capacity expansion of the Olefins plant and its downstream projects. In 1986 the Company was converted into a public limited company with the Govt. of India holding 100% equity. 

Indian Petrochemicals Spreads its Wings

The discovery of oil and associated gas in Bombay High turned out to be another big opportunity for the petrochemical industry in the country. The discovery led to setting up of another petrochemical complex by IPCL in the year 1989 at a cost of 1635 crores – this time gas-based, at NagothaneinRaigad District in the State of Maharashtra with an installed capacity to produce 300,000 metric tonnes per annum (MTA) of Ethylene and 90,000 MTA of Propylene along with other downstream products viz., PP, LDPE, High Density Polyethylene (HDPE), Linear Low Density Polyethylene (LLDPE) and Ethylene Oxide/Ethylene Glycol (EO/EG). 

With both the Complexes running at near to 100% capacity, the gross turnover of the company started moving northwards, i.e., from Rs.883 crores in 1987-88 to Rs.1935 crores in 1991-92.

Another Feather on the Cap

The story of Petrochemicals in India is a fascinating and extensive one. In the early 1990s, ONGC discovered around 190 million tonnes of oil and gas in the Gandhar fields in Gujarat. Spurred by the improved growth rate of the chemical industry in the country and the growing employment opportunities, the Government of India had entrusted IPCL with the task of setting up one more gas based petrochemicals complex at Dahejnear Gandharin Gujarat following almost the same product line as that of Vadodara and Nagothane Complexes. The Dahej project was successfully commissioned by IPCL in 1999, spending Rs.3495 crores. IPCL collected this amount mainly from its own internal resources. 

Credentials/Accolades

IPCL was adjudged “worlds’ No.1 performer” for the year 1990 among all the petrochemical companies in the world by “Chemical Insight,” a London based publication. By 1991 IPCL could meet over 30 percent of the country’s total requirement of polymers, chemicals, and fibers, and it went on improving with each passing year. With supplies taking place from all the three Complexes simultaneously, several ancillary industries had come up under the private sector all over the country, providing employment to thousands, both directly and indirectly. At the peak of its operations in the late 1990s, the company itself had about 13500 employees in its payroll. In the year 1997, it was awarded “Navratna” status by the Government of India. 

IPCL never made losses. Within 20 years period from its inception, the company had achieved its major objectives (i) promote the growth of industries in the country and thereby (ii) generate employment opportunities.

The Abrupt End

In June 2002, the company, along with all the three Petrochemical Complexes(Vadodara, Nagothane, and Dahej), was listed for “strategic sale” by the Government of India for reasons best known to it. It was sold off to Reliance Industries Ltd, and in 2007 this one time, “Navratna” Company breathed its last – it got merged with the purchaser. However, the story of petrochemicals in India does no end here.

Today, Reliance Industries Ltd. is the largest manufacturer of petrochemicals in India. Yes, petrochemicals continue to play a significant role in India’s economic and social growth.  

References

https://www.britannica.com/science/petrochemical

https://gpcb.gov.in/pdf/ONGC_VRD66_EXE_SUMM_ENG.PDF

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