Reverse SEZ proposed for methanol manufacturing in Iran by Dept of Chemicals

While the total industrial production of this chemical is around 3 lakh MT, the industry demand is to the tune of 16-17 lakh MT

The department of chemicals has proposed a reverse SEZ  to be set up  in Chabhar port area of Iran  for manufacturing of industrial chemicals that are used in abundance  by Indian companies. To begin with , one such chemical proposed  is methanol  or methyl alcohol and the proposal has been sent for inter ministerial consultations with department of commerce and ministry of external affairs.
 
According to official sources, methanol is  a primary base chemical which is used by the chemical industry in abundance in the manufacturing  of almost all  industrial chemicals.  While the  total industrial production of this chemical is around 3 lakh metric tonne ( MT), the industry demand is to the tune of 16-17 lakh MT. Thus rest of the quantity is imported at a very high cost .  On the other hand, natural gas  which is crude feedstock required  for manufacturing of methanol  is available in abundance in Iran. The inter ministerial consultation is required for ensuring a safe and legal business environment for the Indian companies who will be venturing into Iran under such a proposal.  

Thus ,  as per the proposal, the Indian companies  either in consortium  or joint venture  with foreign partners or standalone  will set up unit in Iran for manufacturing of methanol . This primary chemical will then be exported back to India where the Indian companies could use it for manufacturing of end use chemicals. Thus  while the Indian chemical companies could  get the supply of the feedstock at a discounted price  compared to the imported price, end use products - speciality chemicals could be manufactured  for use in India and for exports  thus making  the slogan of make in India worthwhile, said officials. The feedstock will be primarily used for value addition in India.  

Meanwhile,  the ministry  is also holding talks with Iran for setting fertiliser plant in that country – similar to the one already existing in Oman.  While the  exact investment scale is not yet finalised,  the proposal is  for setting up a 1.2-million tonne urea plant.

In Oman, Indian Farmers Fertiliser Cooperative Limited (IFFCO) and Krishak Bharati Cooperative Limited (KRIBHCO), along with Oman Oil Company SAOC (OOC) have established Oman India Fertiliser Company SAOC (OMIFCO) for urea project.

With the  concept of reverse SEZ, the ministry has finalised two destinations for talks – Iran and Myanmar.  However industry has suggested another destination Mozambique. The common factor for all three destinations is the  abundance of oil and gas resources, a key feedstock for petrochemicals and petroleum industry.

India is  deficit in cheap energy source particularly natural gas and needs to depend more and more on fuels such as LNG.  As per industry report,  the  local availability of gas which is priced around $ 4.5/mmbtu is very limited and unable to meet total demand  of the industry and thus it has to  depend on imported LNG which is available upwards at $15/mmbtu. On the international scenario with new discovery of shale gas in the USA and recent discoveries in Africa, the local gas prices in these countries are now between $2 to 3/mmbtu.