India's potash manoeuvres abroad face hurdles

The Centre’s effort to increase potash import by aiding Indian companies to acquire assets abroad has not seen any breakthrough.

A senior official from the department of fertilisers said the process was not as simple and there are various roadblocks. .

“Companies may say they were willing to share equity with India, but in reality, the process is complicated,” the official said when asked about offers from Belarus to pick up 20 per cent equity in JSC Belaruskali, one of the two major potash players in the world.

In August, a delegation led by then fertiliser secretary Sutanu Behuria travelled to Belarus to explore opportunities of acquiring stake in the potash reserves in the east European country. The officer said they had to confirm the valuation of the company quoted by Belarus, which was $30 bn. India was offered a 20 per cent stake at $6 bn.

India is the largest importer of muriate of potash (MoP) in the world and buys its entire requirement. India imported 6.36 million tonnes in 2010-11. The price of this key fertilizer has gone up by 60 per cent from Rs 5,055 a tonne in the last financial year to Rs 11,300 at present.

U S Awasthi, managing director, Iffco, said, “No private player can invest so much. The government has to step in or they should give us a sovereign loan at a very low interest rate, as it would be a long gestation project.” He said the government should steer the process by being proactive in taking such strategic decisions.

P S Gahlaut, managing director, Indian Potash Ltd, said, “One of the major reasons behind securing a stake in potash reserves is to get cheaper supply. But even if we get 20 per cent, the party with the remaining stake would dictate the prices.” He echoed Awasthi’s point, saying no private player had the required capital for investment.

Gahlaut said he was not very hopeful of any breakthrough that an Indian company would acquire a stake in potash reserves abroad.

Industry players said they had not heard of any progress in Indian companies acquiring stake in potash companies abroad, after the government came forward to initiate dialogue with the Belarus government.
 

IMPORT STATUS
	Quantity of import (in million tonnes)	Import price  (average) ($ per tonne)	Maximum retail price (average) (Rs  per tonne)
2008-09	6	625	4455
2009-10	5.28	460	4455
2010-11	6.36	370	5055
2011-12 (Till oct 2011)	1.24	490	11300
Source: Fertiliser Association of India and others

Fertiliser Association of India director general Satish Chander also confirmed that he was unaware of any progress in the aforesaid initiative.