Diversion of oxygen to hospitals hits MSMEs

Even as the diversion of oxygen from industries to hospitals is helping the treatment of Covid-19 patients, it has resulted in a severe shortage for several industries.

A large number of industries, especially in the MSME sector that do not have captive oxygen plants, have been severely impacted. Thousands of small and mid-sized industries in and around Bengaluru require close to 2,000 tonnes of oxygen per day and a majority of them are facing an acute shortage for the last one week.

Around 1,500 MSME units in Peenya, Dobaspet, Rajaji Nagar, and Yeshwantpur industrial estates are facing an acute shortage of oxygen to run their operations. The diversion of oxygen to hospitals has rendered more than 1 lakh employees across industries idle.

In Peenya alone, more than 250 units engaged in metal cutting, fabrication, and component manufacturing for automotive, and machining among other applications have shut down their factories due to a shortage of oxygen. The problem started about a week ago for many of these units.

There will be no supply of oxygen from April 22, following a direction from the Empowered Group-II headed by Secretary, Department for Promotion of Industry & Internal Trade (DPIIT).

“We are sitting idle since last Thursday as there is no supply of oxygen. Our workers spend the whole day without any work. This is also impacting our delivery schedules. If the same situation continues for more time, we will have to run into severe losses as well as lose further orders from large industries,” said S K Shanmukha, partner, Sri Lakshmi Fab Tech that is engaged in metal cutting for the elevator industry.

In Peenya alone, a large number of factories have shut down due to a short supply of oxygen.

These units supply metal components to large companies like Tata, L&T, Wipro, and many other telecom equipment makers. “This is the first time in the last 21 years I am facing the shortage of oxygen,” Shanmukha said.

There are nine manufacturers of oxygen in Bengaluru and all of them are forced to divert their production to hospitals in the state to treat Covid-19 patients.

Gautam Shahi, Director, CRISIL Ratings said: “The disruption in the supply of oxygen for industrial use would temporarily impact the revenues of small and mid-sized companies into metal fabrication, automotive components, shipbreaking, paper, and engineering. These typically do not have captive oxygen plants and source their requirement through merchant suppliers for operations such as welding, cutting, cleaning, and chemical processes.”

Meanwhile, the Karnataka Small Scale Industries Association (Kassia) has appealed to Nitin Gadkari, Minister of Road Transport and Highways, Micro, Small and Medium Enterprises, Karnataka's large and medium industries minister Jagadish Shettar, and CC Patil, Minister of Small-Scale Industries to address the issue of small-scale industries and ensure adequate supply of oxygen.

“We suggest the government addresses this issue by ensuring at least 30% of the production of oxygen cylinders in the State is left to industry for their operational purposes so that the industries are able to maintain their production,” K B Arasappa, President, Kassia said.