GAIL’s ₹60,000 Crore Bet on Madhya Pradesh: New Ethane Cracker to Boost Ethylene Production

GAIL India, a state-owned company, has announced a major investment of ₹60,000 crore to build a new ethane cracker plant. The plant will be located in Ashta, district Sehore, Madhya Pradesh. This facility will produce a variety of products from ethylene, a key component used in making plastics, adhesives, synthetic rubber, and other petrochemicals.

Project Details

GAIL plans to construct a 1500 KTA (kilo tonnes per annum) ethane cracker, which will break down ethane (a natural gas component) into ethylene. Ethylene is essential for producing many petrochemical products. The company aims to start construction by February 2025 and begin commercial production in the financial year 2030-31.

Land and Approvals

The project will require about 800 hectares of land, which will be provided by the MP Industrial Development Corporation Ltd. The Madhya Pradesh state government has already started the land allocation process. GAIL also plans to build a 70-hectare township for the project. The company will seek final investment approval from its board once all necessary permissions and support are secured.

Ethane Import and Collaboration

In February last year, GAIL expressed interest in importing ethane from countries with surplus supplies. The imported ethane would be transported via GAIL’s pipeline network to various demand centres. In March, GAIL signed a memorandum of understanding (MoU) with Oil and Natural Gas Corporation (ONGC) and Shell Energy India. This agreement aims to explore the import of ethane and other hydrocarbons and to develop infrastructure at the Shell Energy Terminal in Hazira.

Market Impact

Following the announcement, GAIL’s shares closed at ₹208.05 on the BSE, a drop of 2.14%. In contrast, the benchmark Sensex index rose by 0.27%.