The Centre is planning to revive eight defunct fertiliser plants, including the Ramagundam unit, belonging to the Fertiliser Corporation of India and Hindustan Fertiliser Corporation that have been lying closed for some years now.
Each unit would require Rs 3,000 crore to Rs 5,000 crore depending on the specifications, said S Krishnan fertilisers secretary.
Speaking to the media on the sidelines of the annual seminar of the Fertiliser Association of India here on Thursday, he said in the case of Ramagundam unit, the Centre would first consider allowing public sector units to take a stake and infuse capital into it.
“There is no question of divestment at this point,” he said.
The Ramagundam unit in Karimnagar district of Andhra Pradesh earlier used furnace oil and naphtha as feedstocks. “Using naphtha as feedstock is becoming increasingly costly. There is a need for a coal-based or natural gas connectivity for better efficiency and a less subsidy outgo from the government,” he said.
The revival of these units depends on ensuring continuous supply of feedstock — natural or coal-based gas.
He said the focus would be on be getting natural gas connectivity and having sufficient quantity of gas through a natural gas pipeline or through the carbon route (coal gasification). At present, 32-40 mmscmd gas is available and another 30 mmscmd is likely to be added soon.
“Investments will come into the fertiliser sector if there is a firm supply of gas. More than the price, it is the assured supply of gas that matters,” he said.
According to Krishnan, the department of fertilisers is in talks with gas companies to know how much gas is actually available. Currently, India meets 70 per cent of the fertiliser demand with the rest being imported from China, which has 2.5 times more capacity than India’s 36 million tonne.
He said the Centre was in talks with the Andhra Pradesh government to seek tax incentives for reviving the Ramagundam unit.
Speaking on the occasion, state agriculture minister N Raghuveera Reddy said the state was ready to cooperate with the Centre in this regard.
Krishnan said the Centre was examining the concerns of the fertiliser industry with regard to the losses incurred due to issue of bonds in lieu of subsidy payment.
“The government in consultation with the finance ministry is working to find out how best we can attend to the problem,” he said, adding it was making efforts to pay Rs 20,000 crore subsidy on an immediate basis.