GAIL Urges Madhya Pradesh to Support Development of India’s Largest Ethane Cracker Unit

State-run GAIL announced on Monday that it has requested the Madhya Pradesh government to provide necessary support for establishing India’s largest ethane cracker unit, which is expected to require an investment of around ₹60,000 crore.

The country’s largest gas utility plans to set up a 1,500-kilo tonnes per annum (KTPA) ethane cracker project, along with a greenfield petrochemicals complex, in Ashta tehsil of Sehore district. Ethane is a key raw material used to produce plastics, anti-freeze, and detergents.

“GAIL has submitted its request to the Madhya Pradesh government for providing suitable enablers for the project. Around 800 hectares of land shall be provided by the MP Industrial Development Corporation, for which the State government has already initiated the process,” the Maharatna company stated in a filing on the BSE.

Investment approval from GAIL’s Board will be sought after confirming favorable conditions. The financing mode for the project is yet to be decided, the company added.

Earlier this month, the Madhya Pradesh government approved the project, which is expected to generate 15,000 jobs during the construction phase and about 5,600 jobs during the operational phase. A 70-hectare township is also planned as part of the project. The groundbreaking ceremony is expected by February 2025, with commercial production slated to begin in FY31.

Currently, GAIL has a petrochemical capacity of 8,10,280 tonnes. Indian oil and gas companies like GAIL are expanding their petrochemical businesses to create additional revenue streams amid increasing demand driven by the growing industrial, construction, and manufacturing sectors.

For instance, in March this year, GAIL, ONGC, and Shell Energy India signed a tripartite Memorandum of Understanding (MoU) to explore opportunities for the import of ethane and other hydrocarbons and the development of evacuation infrastructure at Shell Energy Terminal, Hazira.

Additionally, GAIL allocated 30 percent of its total capex of ₹11,426 crore in FY24 to petrochemicals. In FY25, it projects a capex of around ₹11,500 crore, with roughly 45 percent, or ₹5,200 crore, dedicated to petrochemicals.

GAIL's ongoing projects include the completion of the GAIL Mangalore Petrochemicals plant, acquired through the NCLT process (erstwhile JBF Petrochemicals), by March 2025. This plant has a capacity of 1,250 KTPA. Other projects include petrochemical capacities of 610 KTPA at Usar (Maharashtra) and Pata.

Ethane is primarily used as a feedstock in the petrochemical industry to produce ethylene for making plastics and resins. Ethane’s growth as an ethylene feedstock is due to its low relative cost, high ethylene yield, and fewer co-products compared to naphtha, which serves as the primary feedstock in Asia and Europe.

HBL