FAI: ‘ALLOCATION OF DOMESTIC NATURAL GAS FOR PRODUCTION OF NP/NPK FERTILISERS”

FAI Transparent APRIL 2014

THE FERTILISER ASSOCIATION OF INDIA EMPHASIS ON

‘ALLOCATION OF DOMESTIC NATURAL GAS FOR PRODUCTION OF NP/NPK FERTILISERS”

 

 

 

 

New Delhi, 01 September 2014: The Fertiliser Association of India (FAI) – a non-profit, non-trading company mainly representing fertiliser manufacturers, distributors, importers, equipment manufacturers, research institutes and suppliers of inputs – has emphasised on the need of Allocation of Domestic Natural Gas for production of NP/NPK Fertilisers.

 

According to FAI, there is a need for allocation of domestic gas for production of fertilisers without any distinction of products, because there is no distinction between urea and complex fertilisers for application of nitrogen to increase agriculture productivity. Government had taken cognizance of reasonability of allocation of gas to NP/NPK plants and had allocated gas to the complex fertiliser plants. However there seems to be rethinking on the issue to single out complex fertilisers and not to encourage domestic production of these products.

 

Government has been insisting that all the fertiliser companies should switch over to gas from the other liquid fuels so that the fertilisers are available at competitive prices. However, the proposal of withdrawal of allocation of gas will push P&K sector to switch to LNG. The LNG in spot market is available at a delivered price of about US$ 20 per MMBTU. Based on this gas cost, the cost of domestically produced ammonia will exceed US$ 700 per tonne. This will be a completely unviable proposition for the production of NP/NPK fertilisers and hence disturb equilibrium between domestic production and import in fulfilling the large requirement of the country. India imported 1.3 million tonnes of ammonia in 2012-13 in spite of poor capacity utilization of 6I% of complex fertiliser plants. The country would need to import more than 2.5 million tonnes of ammonia if NP/NPK plants operate at I00% capacity utilization. Also some of the plants because of their location will not be able to import ammonia. India imported 6.3 million tonne DAP and complex fertilisers in 20l2-13. Any reduction in production of domestic ammonia will increase dependence on imports of ammonia and finished products like DAP and NPKs. India is already dependent on import of fertiliser and fertiliser raw materials to the extent of more than 70% of her requirement. Not providing domestic gas to the P&K fertilisers will be contrary to the efforts to reduce dependence on imported raw materials and fertiliser products.

 

NP/NPK complex fertilisers also supply nitrogen along with phosphate and potash and the policy of the government is to promote balanced fertilisation through NPK fertilisers. Prices of these fertilisers are disproportionately higher than urea and efforts should be to reduce their cost of production within the country. Therefore, there is need to allocate gas for manufacture of NP/NPK fertilisers. There should not be any encouragement of the use of ‘N’ only through urea.

 

In this context, it is necessary that priority in allocation of domestic gas be maintained for both production of urea and NP/NPK fertilisers. The price of domestic gas is already high and will increase further. Therefore, there is no element of subsidy in making gas available for fertiliser production.

 


Speaking about the issue, Mr Satish Chander, Director General, The Fertiliser Association of Indiasaid: “EGOM had allocated natural gas to fertiliser plants. This allocation also includes allocation for fertiliser plants producing phosphatic and potassic (P&K) fertilisers. In violation of EGOM decision, DOF has stopped supply of gas to one of the manufacturers of P&K fertilisers. FAI has been representing all along that use of complex fertilisers is very important in the interest of balanced fertilization and we should encourage the application of N through NPKs. Therefore, supply of domestic gas to P&K fertilisers should continue in the interest of balanced fertilization. Reduction in production of P&K fertilisers will further increase the dependence on imports of these fertlisers.”

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