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The demand for oxygen has shot up as Covid cases keep rising. The All India Industrial Gas Manufacturers’ Association (AIIGMA), with 300 members, is working with the government to step up supplies. AIIGMA president Saket Tiku talks to TOI about the increasing costs and shortages and what’s being done to tackle them.
Why are there a lot of reports about rise in the price of oxygen?
All government hospitals and big hospitals have long-term contracts for oxygen supply, most from pre-Covid times. In these cases, the rates have not changed. But the rates have gone up in the unorganized sector of healthcare, like in smaller hospitals and nursing homes who are supplied by smaller reseller. The price has gone up by five or six rupees at best which is unlikely to impact patients. One cylinder of 7 cubic metre of oxygen, which costs Rs 175-200 should last for around 20 hours. Even counting all costs it would amount to Rs 350. So you see it is not the price at the level of the seller that is impacting the patient. We sell to the hospital not to the patient. It is what hospitals charge that impact patients. So maybe govt has to cap the cost of oxygen at the level of the hospital.
When government has already capped them, how can prices go up?
The National Pharmaceutical Pricing Authority fixed the price of oxygen gas at Rs 17.49 per cubic metre, but not of the raw material, which is liquid oxygen. Oxygen gas is mostly filled in cylinders by converting liquid oxygen into gaseous form. The price of liquid oxygen is not capped and that has gone up. If I am a reseller of oxygen gas, I am buying liquid oxygen at Rs 20-25 but I am asked to sell it for Rs 17.50 and so he resorts to hanky-panky. He has to bear the raised cost of liquid oxygen, cost of its conversion to gas and the transport cost of oxygen cylinders. We gave a costing calculation to the government and asked for price to be capped at that level. Nothing has been done yet. The government also needs to revise the rate for medical oxygen gas as the present cap is not applicable as the buying price of the raw material is more than ceiling price for the gas.
Despite the ceiling price, in general, oxygen gas was being sold at Rs 9-11 per cubic metre. But now everyone is charging the ceiling price. That is because the gas manufacturing plants have to make up for the loss of not being able to produce other gases such as nitrogen and argon as the bulk of its capacity is now being harnessed to produce oxygen.
Is there adequate manufacture of oxygen in the country?
We are tracking the availability of oxygen across the country. Oxygen supplied in hospitals is primarily an industrial product, mostly meant for steel plants. In normal times, the world over, about 15-20% goes to hospitals. Factories set up to produce industrial gases produce industrial oxygen, nitrogen, argon, and also medical oxygen. For industrial oxygen the purity level has to be higher, over 99% free of impurities. But according to the Indian pharmacopeia 2018, for medical oxygen the permissible purity is about 93%, but medical oxygen has to be free of certain specific type of impurities.
When the committee for adequate availability of medical oxygen in the wake of Covid-19 pandemic was formed by the central government by the end of March headed by the secretary of the DPIIT , at the first meeting on April 5 we asked the government to issue licences to allow plants with licence to produce industrial oxygen to be allowed to produce medical oxygen. For industrial oxygen the purity level has to be higher i.e. it has to be over 99% free of impurities. But according to the Indian pharmacopeia 2018, for medical oxygen the permissible purity is 93%. The order for licences to produce medical oxygen was done within two days. Thanks to that move where we produced 750 metric tons of medical oxygen in pre-Covid India, today we produce 2800-3000 metric tons of medical oxygen. Industries’ demand has slowed down due to Covid but we are still producing about 2200 metric tons for industrial use. So altogether we are producing over 5000 metric tons of oxygen.
Why are there reports about shortages?
We have to transport the oxygen over 1000s of kilometres, say from Bokaro to New Delhi or from Mumbai to Telengana or Karnataka That’s a huge logistics exercise and some small snags can cause temporary shortage. Earlier such huge quantities were not needed and we transported across maximum 100-200 kilometres. About 55-60% of medical oxygen is produced as liquid oxygen and we need to ensure we have enough cryogenic tanks needed to transport this. The remaining roughly 40% is produced in gaseous form filled in cylinders and supplied to smaller nursing homes. It is also produced and supplied from small air separation units or small plants which produce medical oxygen only.
Along with supplying oxygen, we are also charting how many patients could be treated for the amount of oxygen we are supplying. But we find a mismatch. The oxygen use does not match with the total number of active cases and so maybe there are more active cases. It indicates that either oxygen is being wasted or not responsibly used or there are more people who need oxygen, both Covid patients as well as emergency surgery patients etc. than what we are estimating. The wastage could be due to leakage in the pipes or cylinders. So we are starting a Save Oxygen campaign, to urge people to use it responsibly because we could be facing a crisis if infections keep climbing like this. We need to tell hospitals to ensure that not a single cubic metre of oxygen is wasted. We can’t afford it.
Is there a problem with not receiving payment on time for the oxygen from buyers?
In most states there is no problem of payment whether from private or government. But in Tripura and Assam the govt has not paid sellers for over one and a half years. There are bills amounting to Rs 1.5 crore pending and simultaneously the sellers also have state electricity boards breathing down their neck seeking payment of electricity bills. How can they function like this? How can you hold up bills for so long? None of us have forgotten Gorakhpur and no one wants a repeat which is why we are closely tracking unpaid bills and get the central government to intervene. But in these two states, till now the bills remain unpaid.
What preparations are on for the coming days?
How do we plan for anything? We need some realistic projection of how much the demand will be so that we know what level of demand to plan for. We do not know how many infections to expect. So far, all projections have been wrong. We are still working on enhancing the capacity by restarting some older plants which were shut down and on setting up new plants. The government is in dilemma on whether to cap industrial use. Some state govts have capped like in Maharashtra, where it is now 80% medical 20% industrial. But it is a difficult call for the central government. Industrial oxygen is needed to get the industries up and running to keep the economy running. At the same time with the cases rising like this the need for medical oxygen is also pressing. It’s a tough balancing act.
Why are there a lot of reports about rise in the price of oxygen?
All government hospitals and big hospitals have long-term contracts for oxygen supply, most from pre-Covid times. In these cases, the rates have not changed. But the rates have gone up in the unorganized sector of healthcare, like in smaller hospitals and nursing homes who are supplied by smaller reseller. The price has gone up by five or six rupees at best which is unlikely to impact patients. One cylinder of 7 cubic metre of oxygen, which costs Rs 175-200 should last for around 20 hours. Even counting all costs it would amount to Rs 350. So you see it is not the price at the level of the seller that is impacting the patient. We sell to the hospital not to the patient. It is what hospitals charge that impact patients. So maybe govt has to cap the cost of oxygen at the level of the hospital.
When government has already capped them, how can prices go up?
The National Pharmaceutical Pricing Authority fixed the price of oxygen gas at Rs 17.49 per cubic metre, but not of the raw material, which is liquid oxygen. Oxygen gas is mostly filled in cylinders by converting liquid oxygen into gaseous form. The price of liquid oxygen is not capped and that has gone up. If I am a reseller of oxygen gas, I am buying liquid oxygen at Rs 20-25 but I am asked to sell it for Rs 17.50 and so he resorts to hanky-panky. He has to bear the raised cost of liquid oxygen, cost of its conversion to gas and the transport cost of oxygen cylinders. We gave a costing calculation to the government and asked for price to be capped at that level. Nothing has been done yet. The government also needs to revise the rate for medical oxygen gas as the present cap is not applicable as the buying price of the raw material is more than ceiling price for the gas.
Despite the ceiling price, in general, oxygen gas was being sold at Rs 9-11 per cubic metre. But now everyone is charging the ceiling price. That is because the gas manufacturing plants have to make up for the loss of not being able to produce other gases such as nitrogen and argon as the bulk of its capacity is now being harnessed to produce oxygen.
Is there adequate manufacture of oxygen in the country?
We are tracking the availability of oxygen across the country. Oxygen supplied in hospitals is primarily an industrial product, mostly meant for steel plants. In normal times, the world over, about 15-20% goes to hospitals. Factories set up to produce industrial gases produce industrial oxygen, nitrogen, argon, and also medical oxygen. For industrial oxygen the purity level has to be higher, over 99% free of impurities. But according to the Indian pharmacopeia 2018, for medical oxygen the permissible purity is about 93%, but medical oxygen has to be free of certain specific type of impurities.
When the committee for adequate availability of medical oxygen in the wake of Covid-19 pandemic was formed by the central government by the end of March headed by the secretary of the DPIIT , at the first meeting on April 5 we asked the government to issue licences to allow plants with licence to produce industrial oxygen to be allowed to produce medical oxygen. For industrial oxygen the purity level has to be higher i.e. it has to be over 99% free of impurities. But according to the Indian pharmacopeia 2018, for medical oxygen the permissible purity is 93%. The order for licences to produce medical oxygen was done within two days. Thanks to that move where we produced 750 metric tons of medical oxygen in pre-Covid India, today we produce 2800-3000 metric tons of medical oxygen. Industries’ demand has slowed down due to Covid but we are still producing about 2200 metric tons for industrial use. So altogether we are producing over 5000 metric tons of oxygen.
Why are there reports about shortages?
We have to transport the oxygen over 1000s of kilometres, say from Bokaro to New Delhi or from Mumbai to Telengana or Karnataka That’s a huge logistics exercise and some small snags can cause temporary shortage. Earlier such huge quantities were not needed and we transported across maximum 100-200 kilometres. About 55-60% of medical oxygen is produced as liquid oxygen and we need to ensure we have enough cryogenic tanks needed to transport this. The remaining roughly 40% is produced in gaseous form filled in cylinders and supplied to smaller nursing homes. It is also produced and supplied from small air separation units or small plants which produce medical oxygen only.
Along with supplying oxygen, we are also charting how many patients could be treated for the amount of oxygen we are supplying. But we find a mismatch. The oxygen use does not match with the total number of active cases and so maybe there are more active cases. It indicates that either oxygen is being wasted or not responsibly used or there are more people who need oxygen, both Covid patients as well as emergency surgery patients etc. than what we are estimating. The wastage could be due to leakage in the pipes or cylinders. So we are starting a Save Oxygen campaign, to urge people to use it responsibly because we could be facing a crisis if infections keep climbing like this. We need to tell hospitals to ensure that not a single cubic metre of oxygen is wasted. We can’t afford it.
Is there a problem with not receiving payment on time for the oxygen from buyers?
In most states there is no problem of payment whether from private or government. But in Tripura and Assam the govt has not paid sellers for over one and a half years. There are bills amounting to Rs 1.5 crore pending and simultaneously the sellers also have state electricity boards breathing down their neck seeking payment of electricity bills. How can they function like this? How can you hold up bills for so long? None of us have forgotten Gorakhpur and no one wants a repeat which is why we are closely tracking unpaid bills and get the central government to intervene. But in these two states, till now the bills remain unpaid.
What preparations are on for the coming days?
How do we plan for anything? We need some realistic projection of how much the demand will be so that we know what level of demand to plan for. We do not know how many infections to expect. So far, all projections have been wrong. We are still working on enhancing the capacity by restarting some older plants which were shut down and on setting up new plants. The government is in dilemma on whether to cap industrial use. Some state govts have capped like in Maharashtra, where it is now 80% medical 20% industrial. But it is a difficult call for the central government. Industrial oxygen is needed to get the industries up and running to keep the economy running. At the same time with the cases rising like this the need for medical oxygen is also pressing. It’s a tough balancing act.
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