income tax department India's oxygen supply chain

Oxygen – ironically earth’s most freely available resource, and yet short in supply. Hospitals are suddenly running out of medical oxygen and there is more panic amidst the pandemic than ever before because the belief that the doctors and hospitals could save us has been shaken, as people have died in bulk owing to shortage of oxygen supply. Nobody would have imagined a day where oxygen would be out of supply and people would die as a result of the same. However, that’s not the entire truth – the production of oxygen is the least of the concern here, as the real source of the issue is ‘the Oxygen supply chain’. This would become evident when you understand India’s current demand and supply for oxygen.

India’s demand for Oxygen before the pandemic was 700 metric tonne per day. This jumped to 2,800 metric tonnes per day after the pandemic last year. However, due to the surge in COVID-19 cases, now India’s oxygen requirement has suddenly increased to 5,500 metric tonnes per day. It would seem as if the production of oxygen may have been overwhelmed, however, it would be assuring to know that India’s oxygen production capacity currently is 7,287 metric tonnes and there is a buffer stock of approximately 50,000 metric tonnes as of April 15, as per health minister’s statement. INOX Air Products, the country’s largest manufacturer of medical oxygen is currently producing 2,200 metric tonnes per day from its 25 plants. Reliance Industries is producing 1,000 metric tonne oxygen per day although it is not their business. Tata Steel is producing 600 metric tonnes of oxygen per day while the Steel Authority of India (SAIL) is also working at its peak capacity of 860 metric tonnes per day. And people still died due to lack of oxygen – reason? ‘Supply Chain Management’ – often the most ignored aspect of the business and even governance.

One of the most common mistakes in business plans is a lack of focus on the supply chain – if the product isn’t going to reach the ultimate consumers, how will the sales grow? On the contrary, e-commerce companies like Amazon have been successful in this era which provides a platform to buy and sell with a robust supply chain for delivering the products in time while maintaining the quality and keeping things hassle-free for buyers and sellers. However, that’s a discussion for another day, as a failure of few businesses doesn’t impact the country as much as the failure of Governance does. And if we were to find out the culprit for this whole oxygen supply facade, you may want to begin by asking questions to the Government first, the body responsible for handling the pandemic. However, let us first understand what went wrong and how we reached this day.

Allocation of Medical Oxygen

Production of oxygen is abundant, however, the allocation of the same to the hospitals and other purposes is managed by the Empowered Group II (EGII). The group has nominated members from the states, representatives from manufacturers and is headed by Mr Guruprasad Mahapatra, the Secretary of ‘Department of Promotion of Industry and Internal Trade (DPIIT)’ which comes under the control of the Union Government. The group reconstituted under Disaster Management Act, 2005 is responsible for working on ensuring the availability of essential medical equipment and augmenting human resources, amidst the pandemic. Clearly, the people responsible for this whole debacle is this committee, as it was their responsibility.

However, the Empowered Groups (total of 11) formed in March 2020 to look after the COVID-19 situation were condensed into 6 bigger groups in September 2020, so that one group is tasked with two or more functions. Now, as it is with any bigger group and Government organisations in India, the committee had a lot to plan but didn’t have time to plan and of course, the consensus is never around the corner for such committees. Thus, the decisions were delayed and that has cost us dearly.

Besides, oxygen is not used for medical purposes alone and there are routine industrial uses as well. On April 18, when Government banned the use of oxygen for industrial use, it also allowed nine industries to continue using the stock – ampoules and vials, pharmaceuticals, steel plants, petroleum refineries, nuclear energy facilities, oxygen cylinder manufacturers, waste-water treatment plants, food and water purification – industries which require oxygen for uninterrupted operation of furnaces. The total usage of these industries is around 2,500 metric tonnes per day. Thus, the Government did not have any clue about the shortage of O2 in hospitals. On April 21, the Prime Minister’s Office released a statement that “Against the present demand from 20 states of 6,785 metric tonnes of oxygen, Government has allocated 6,822 metric tonnes to these states”. Surprisingly, India has 28 states and 9 union territories and the Government is talking about only 20 states. To add more to the curiosity, on April 26, the Delhi High Court requested Central Government to entirely stop the use of O2 for industrial purposes, however, the Central Government hasn’t passed any order yet. The government did float an emergency import tender for 50,000 metric tonnes of oxygen, however, nothing has been spoken on its date of delivery.

Transportation of Medical Oxygen

Allocation is not the only problem that the Government needs to resolve. Even if oxygen is appropriately allocated to a particular state, the transportation of the same is a key implementation factor. India’s oxygen manufacturing plants are unevenly distributed across the country. The eight states of Maharashtra, Gujarat, Jharkhand, Odisha, Tamil Nadu, Karnataka, Kerala and West Bengal account for 80% of India’s total oxygen production. So, if oxygen is short in supply at Delhi, oxygen must be transported from 1,000+ km away from Gujarat, the nearest state and it would take a day for the same if everything occurs smoothly.

And everything doesn’t occur smoothly, as different states are in different modes of lockdown – some allow certain kind of transportation, some states have banned transportation from other particular states and some have even shut down their borders completely. So, if o2 has to be transported, all the states from where the same vehicle shall pass must provide their consent and permission, and we already know bureaucracy is a lengthy process, especially in India. So, the delay in transportation has further costed us dearly.

And that’s the reason why suddenly all the states started requesting for airlifting the oxygen tankers and delivering the same. However, easier said than done, transporting oxygen in large quantities by air has not been done before owing to its hazardous nature and therefore, even the Aircraft Rules, 1937 do not permit private airlines to do so. So then, Defence aircraft could well come to the rescue, however, even that requires several permissions from the Ministry of Defence, Indian Air Force and Directorate General of Civil Aviation (DGCA). Difficult, yet doable, and hence, Government has been working on the same. But then there’s another problem.

Storage of Medical Oxygen

Steel Authority of India (SAIL) disclosed that the company was not able to despatch its stockpile of 11,000 metric tonnes of oxygen owing to a lack of oxygen tankers. We do not enough oxygen tankers to supply the oxygen to different states. Transporting liquid medical oxygen has several challenges, as it requires special cryogenic tankers. We never had such kind of situation before and do not have a large number of tankers to supply the same. The normal daily oxygen transportation (pre-pandemic period) was limited to around 300 – 400 metric tonnes and thus, we do not have the infrastructure to supply large scale oxygen. The government is now converting nitrogen and argon tankers into oxygen tankers, however, that will come to our rescue after a while. The Railways is also running Special O2 Express for transporting oxygen. These limited tankers have to deliver and return to their base, and continue the to and fro cycle.

The problem doesn’t end just with transportation. Once the oxygen reached the location, it has to be stored in cryogenic vessels or cylinders which again aren’t available in the numbers that we need right now. The manufacturers were simply not prepared for catering to such a huge demand. There is demand for 10,000 cylinders daily, but the industry manufactures only 2,000 a day. Besides, cylinders are manufactured foreseeing demand and in February-March, the production slowed down as it seemed Covid was over and there was no requirement. The government had placed estimated requirements to the cylinder manufacturers last year, but this year the Government did not plan anything.

Like the Oxygen tankers, even the cylinders have to be used and then returned to the base for refilling. Hospitals are in chaos currently owing to the sudden surge in the number of patients, and the recent cases of fire in some hospitals is an example of how hospitals are out of control. Thus, the oxygen cylinders may not be returning immediately for refilling and therefore, the usage of the same may not be as efficient, as one would expect to overcome the situation.

There’s one common factor in the whole story – ‘sudden surge in demand’. The oxygen manufacturers did not expect, the storage tankers did not expect, the cylinders did not expect, the hospitals did not expect and even the State and Union Governments did not expect that the cases would surge so dramatically. We can blame the Government for taking the pandemic too lightly, exporting the vaccines to other countries while there’s a short supply for its citizen, not running vaccination drive at its full, conducting elections and campaigns in the middle of a global pandemic, not effectively utilising the contributions to PM Cares Fund, allowing religious and sporting events to occur, not expending the budget allocations promised for COVID-19 vaccines and healthcare budget, and many more things. However, we cannot deny the fact that the situation emerged because people took the pandemic casually, left the guard and stepped out of their homes, got infected with the COVID-19 virus and then required the medical support and oxygen – we created the demand, the surge in the cases and the short supply of everything thereon.

While expecting a better response from the country, we need to respond better ourselves.

Stay Home! That’s the best thing you can do to help overcome the oxygen supply chain crisis and to appreciate our medical superheroes!

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