Govt wants to set up new fertiliser units instead of restarting closed ones

Erstwhile govt had proposed to revive urea production in country by deciding to restart closed fertiliser factories

The ministry of chemicals and fertilisers has decided to set up new fertiliser plants rather than restarting closed fertiliser units, in a sharp departure from its earlier strategy. The earlier government. had proposed to revive urea production in country by deciding to restart closed fertiliser factories.

According to official sources, the decision comes a reply to the parliament by the new fertiliser minister. The proposal is to revive closed fertiliser units of Fertiliser Corporation of India Ltd and Hindusthan Fertiliser Corporation Ltd by setting up new plants at Sindri, Talcher and Ramagundam , Barauni, Gorakhpur, Korba, Haldia and Durgapur.

 The revival and restarting of fertiliser units has been a long drawn strategy for the government of India but action at the ground level has been a laggard.

Meanwhile, the Fertiliser Ministry has asked the Petroleum Ministry to increase the supply of gas for urea manufacturing plants and also explore the possibility of gas pipeline from Phulpur to Haldia as it can lead to revival of five closed plants as per reports.

Fertiliser plants are the biggest consumers of domestically produced gas, using 31.5 million metric standard cubic metres per day (mmscmd). The natural gas accounts for as much as 65-70% of urea production costs in India, and it is cost effective compared with other feedstock.

The country's urea production has remained stagnant at 22 million tonnes (MT) since 2007-08, while current demand is about 30 MT , forcing the country to meet the shortfall of 8 MT through imports.

According to official sources, no urea capacity has been added in India in almost 13 years. In 2008, Cabinet approved to revive fertiliser Corporation of India Limited (FCIL) and Hindustan fertilisers Corporation Limited (HFCL) units subject to non-recourse to Government funding.

In 2011, the Cabinet Committee on Economic Affairs (CCEA), approved the Draft Rehabilitation Scheme (DRS) for revival of all the Units of FCIL and HFCL.

As per the scheme, revival of Talcher Unit would have been done by the consortium of Rashtriya Chemical & fertilisers Limited (RCF), Coal India Limited (CIL) and Gas Authority of India Limited (GAIL),. Similarly, the revival of Ramagundam Unit would have bene done by Engineers India Limited (EIL) and National fertilisers Limited (NFL) and revival of Sindri unit by Steel Authority of India Limited (SAIL).

Subsequently CCEA, in 2013, approved waiver of Government of India loan and interest to facilitate Fertiliser Corporation of india Ltd to arrive at positive net worth.
 
As many as ten fertiliser plants out of 23 operated by state-run companies are closed, while 7 others are suffering losses.
There are seven public sector undertakings (PSUs) in the fertiliser sector having total of 23 manufacturing plants, and out of which only six plants are in profit.

The PSUs which are operating in the fertiliser sector are Rashtriya Chemicals & fertilisers (RCF), National Fertilisers Ltd (NFL), Madras fertilisers Ltd (MFL), Fertilisers And Chemicals Travancore (FACT), Brahmaputra Valley Fertilisers Corporation Ltd (BVFCL), Fertilisers Corporation of India Ltd (FCIL) and Hindustan Fertilisers Corporation Ltd (HFCL).