New policy to boost domestic Urea production, curb imports
The Indian Cabinet Committee of Economic Affairs (CCEA), on Tuesday, approved a policy to stabilise the prices of natural gas and imported Liquefied Natural Gas (LNG) used by the domestic fertilizer plants.
Under this policy, the government intends to supply gas at uniform delivered price to the fertilizer plants on the gas grid, for the production of urea under a pooling mechanism.
It is expected that the cost of urea production at pooled price would be less than the price of imported urea and this will definitely encourage the existing urea units to raise production beyond their re-assessed capacity, said an official release.
An increase in domestic manufacturing of urea will also come as a boost to the government’s ‘Make in India’ policy and is also expected to augment indigenous manufacturing capacity, added the release.
This move is further expected to help Gorakhpur, Barauni and Sindri urea plants, which are supposed to be the main customers for the proposed Jagdishpur-Haldia (JH) pipeline, the work of which would probably start this financial year, informed the release.
The JH pipeline that was approved in 2007, if implemented, is expected to benefit four Indian states-West Bengal, Bihar, Jharkhand, and Uttar Pradesh and will form basis for setting up of City Gas Networks in 17 major cities of these States.
According to the Department of Fertilizers estimates, the government’s latest decision will increase the production capacity of existing fertilizers units and will supplement the production in units by around 37.13 lakh MT over the next four years from 2015-19.
By reducing the import burden to this extent, the policy is also expected to save subsidies worth Rs 1550 crore.
Of the total 30 fertilizer units in India currently, 27 units are gas-based and 3 units - Mangalore Chemicals & Fertilizers Limited (MCFL), Madras Fertilizers Limited (MFL) and Southern Petrochemicals Industries Limited (SPIC) are Naphtha-based.
Out of the total consumption of 30 Million Metric Tonnes Per Annum (MMTPA), 23 MMTPA is produced in India and 2 MMTPA is imported from Oman under the Urea Off-Take Agreement, which would continue till 2020.
The balance requirement of the fertilizer up to 5 MMTPA is met through the imports. Urea demand for the year 2016-17 is projected at 34 MMTPA and by 2017-18, it is projected to be reaching 38 MMTPA.
This article was published on April 1, 2015.
The natural gas to be imported through the pipeline would cost $5-5.50 per mmBtu to reach ..
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