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| Rs 21,000 cr investment in fertiliser stuck for want of gas |
| Press Trust of India / New Delhi Oct 21, 2009, 14:57 IST |
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Over Rs 21,000 crore investment in six new fertiliser plants, that would have raised India's urea making capacity by 30 per cent, is stuck for want of natural gas, a senior government official has said.
Six companies — IFFCO, Kribhco, Chambal Fertilisers and Chemicals, Tata Chemicals, Indo Gulf Fertilizers and public sector Rashtriya Chemicals and Fertilizers (RCF) — have submitted proposals for setting up new urea plants, with 10 lakh tonnes capacity each, the official said.
"Since there is no commitment for assured supply of (feedstock) gas, these companies have not started the projects even after their boards' approval," he said.
Reliance Industries' eastern offshore KG-D6 gas field is capable of meeting the entire feedstock requirement of 13.2 mmscmd of these plants, but allocation have not been made.
KG-D6 has a capacity to produce about 65 million standard cubic meters per day (mmscmd) of gas but is generating below 40 mmscmd gas for want of government nominated buyers.
The official said the government had previously given existing urea making plants the top priority for receiving KG-D6 gas when first 40 mmscmd output was alloted. Fertiliser firms want the new plants to also enjoy the same priority.
However, with the constitution of the Empowered Group of Ministers (EGoM) on gas, he said, the matter may be decided by the panel.
According to the proposals, these six firms would need 2.2 mmscmd gas each, which can be supplied from RIL's KG-D6 basin. But they want a commitment from the government that they would receive the required quantity of gas after they complete their projects.
As per the proposals the new brownfield plants would be set up near the same site where existing units are located and each requires a capital investment of Rs 3,500-4,000 crore.
The official said if these projects come up, which may take three to four years to complete, India would increase the urea production by 30 per cent to 260 lakh tonnes from the current 200 lakh tonnes. "This will be the first major investment in urea after the new policy," he added Since annual import at the current demand is about 60 lakh tonnes, there may be less dependence on overseas product even if urea requirement rises, he added.
Beside self sufficiency, the government also hopes to reduce fertiliser subsidy with increased domestic production, as the government assistance last year was over Rs 1,00,000 crore.
The high level of subsidy was due to rise in global prices and the government's commitment to follow import parity for domestic producers.However, the subsidy level in 2009-10 fiscal is estimated to ease to Rs 55,000 crore as global prices softened.
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