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Farmers oppose cut in natural gas supply to fertiliser units

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A proposed move by the Centre to slash natural gas supplies to phosphorous and potash-based (P&K) manufacturing units has seen a number of farmer bodies, agro-experts and scientists raise a howl of protest. The move could seriously impact soil fertility, which in turn could hit food production in the country, they warned.

Nutrients in soil are necessary to increase overall productivity of agri-commodities to help meet the country’s rising demand for foodgrains. While the government has intensified efforts to raise domestic production of agri-commodities and thus, reduce reliance on imports, any cut in natural gas supplies to P&K-based fertiliser units could throw a spanner in the government’s works. As a result, several agricultural organisations from various parts of the country have lodged their protests with the government and have demanded priority gas allocation be maintained to such units.

In a letter to the Union Finance Minister and Chairman of the Empowered Group of Ministers (EGoM) Pranab Mukherjee, Krishi Vistar Pratishthan, a farmer–led organisation, said, “Any decline in the availability and affordability of phosphorus and potash-based fertilisers will affect crop productivity.”

A copy of the letter was also sent to S. Jaipal Reddy, minister for petroleum and natural gas.

A recent report by credit rating agency forecasts natural gas production in India is likely to remain subdued over the next couple of years due to fall in gas production in KG-D6 offshore oil and gas fields.

India’s natural gas supply has been adversely impacted in 2011-12 due to fall in production at KG-D6 to 46.6 million metric standard cubic meter per day (MMSCMD) in the first half of 2011-12, from 55.9 MMSCMD in 2010-11. Overall, the agency expects domestic natural gas supplies to increase to around 153 MMSCMD by 2014-15, from 143 MMSCMD in 2010-11. The current estimate is about 22 per cent lower than the previous estimate of 195 MMSCMD, primarily due to lower production in KG-D6 and anticipated delay in commissioning KG’s satellite fields.

On the demand front, despite the significantly high potential across several sectors, the realisable demand for natural gas will be a function of gas supplies in the market at reasonable prices, price competitiveness of gas as compared to alternate fuels, timely commissioning of the proposed transmission pipeline infrastructure and regulatory initiatives in the power sector. Demand, however, is estimated to increase from new customers once the bottlenecks in the trunk pipeline are cleared in the near to medium term. Overall, demand for gas is estimated to rise to around 410 MMSCMD by 2019-20 from the actual consumption of around 177 MMSCMD in 2010-11.

In a representation to the government, Rayat Seva Krishi Udyog Sahakari Sangh said any constraint on P&K fertiliser supply would hurt its member farmers, who are technology savvy and are concerned about the health of their farm soil.

Even agriculture scientists have expressed shock over the proposed move. Dr S S Magar, former Vice Chancellor of Dr Balasaheb Sawant Konkan Krishi Vidyapeeth said restricting supply of natural gas to P&K fertiliser units would be a retrograde step, particularly when Indian farmers are beginning to adopt a progressive approach to agriculture.

Lower production of P&K fertilisers would also result in a massive increase in import of naptha and fuel oil, the prices of which are linked to the volatile crude oil prices.

The units that are already using natural gas, available at about $5 per mBTU (Million British Thermal Units), as feedstock, will now have to import liquefied natural gas, which cost close to $20 per mBTU. This will dramatically raise the cost of fertiliser output, adding to the already worrisome inflationary pressure in the food sector.

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