Manufacturing cos trake a rain break

MUMBAI: Heavy rains in Gujarat and parts of Maharashtra have affected manufacturing activities in companies located in these regions, with units either stopping production temporarily or operating at less than optimum capacity.

With gas supplies from state-owned GAIL and ONGC being disrupted, it is expected that other units in the region that use gas as their main feedstock, could also likely shut down their units.

The impact from the rains has been felt across all industries ranging from India’s largest petrochemicals company, Reliance Industries and state-owned ONGC to mid sized private steel company Essar Steel.

The impact has been the most in the oil and gas sector, which is likely to trigger a larger impact on industries such as power, fertilisers and steel which oil and gas as feedstock.

In a statement issued late on Tuesday, Reliance Industries said it had to shut down some plants at its Hazira complex “in view of heavy rains and prevailing flood situation of river Tapi, (which is) adjacent to the company’s (Hazira) complex.” Reliance said that it’ll keep the plants shut “till such time the normalcy is restored.” Reliance didn’t elaborate on how many plants would be shut and what the financial impact could be.

Supplies of oil and gas to units are likely to be disrupted with ONGC saying it has had to shut down production from its gas fields at Mumbai offshore including those at Panna, Mukta and Tapti, because of flooding at its processing facility at Hazira on Monday night. The curtailment of gas supplies will impact production by consumers like Essar Steel, Gujarat Power Corporation, NTPC and Kribhco.

About 27m to 28m standard cubic meters per day (MMSCMD) of gas output from Bassein field and about 13 MMSCMD from the Panna-Mukta fields was shut down, industry sources said.

ONGC’s oil output from the Mumbai High field goes to Uran in Maharashtra, which was operating normally. But in the Panna, Mukta and Tapti fields, oil and gas are produced from the same wells and since gas was not accepted at Hazira, oil output too was suspended.

Of the 65 to 70 wells producing oil in the field, only 17 were operating on Tuesday morning, an ONGC source said, adding that the crude oil output was down from 38,000 barrels a day, to 18,000 barrels a day.

State-owned gas utility GAIL said its main trunk Hazira-Vijaipur-Jagdishpur (HVJ) pipeline was partially shut due to floods. Only its Vijaipur-Jagdishpur sector is now operational. Gas supplies to several large customers in the region is hit and ONGC may take at least few days to restart the Hazira facility, sources said.

Essar Steel could likely see a reduction in its production in August as heavy rains have affected the unit’s smooth production. An Essar Steel spokesperson said production at its Hazira plant near Surat, has been below normal levels. “As a safety precaution we have reduced production. Telephone lines have been totally cut off and there has been no contact since 5.30 pm,” he added.

Essar Steel makes about 3 million tonnes of steel from its Hazira plant.The Essar group, which also operates a 500 megawatt power plant at Hazira, admitted a cut in its power generation. “Since our power plant is connected to the GEB (Gujarat Electricity Board) Grid and due to GEB transmission lines being out due to flooding, we are generating 100 MW for our captive purpose without connecting to the grid,” the spokesman added.

Uttam Galva Steels, a mid sized player with a plant at Khopoli, near Mumbai, said it’s work has been affected. “There has been some effect in the productivity as there was drop in logistics,” said director Ankit Miglani. “Movement of machinery and other material for an ongoing expansion has been affected and so has been the on-site work. But we should be able to make up for the loss in this quarter itself,” he added. Uttam Galva Steels is doubling the capacity of its cold rolled steel to one million tonnes per annum.

Other metal players such as Hindalco, JSW Steel, Tata Steel and Ispat Industries have said that they have not had any major impact from rains in any part of their operations.