Reliance on urea imports set to dip

The proposed investment of Rs 40 billion on greenfield and brownfield fertiliser projects is likely to reduce dependence on the import of fertiliser when these plants become operational by 2010, said the latest Rabobank report.

Indian fertiliser producers have allocated Rs 10 billion on revamping existing facilities while a sum of Rs 30 billion has been chalked out for the expansion. Considering the dearth of raw material sources for fertiliser, fertiliser companies in India are now planning to invest another US $5 billion in 19 overseas joint ventures over the next three years.

With the domestic production of 20 million tonnes of urea and 4.2 million tonnes of diammonium phosphate (DAP), India is currently able to meet 76 per cent and 59 per cent of its local demand while the remaining 24 per cent 41 per cent is still met through imports. The country also imports muritte of potash (MoP) to the tune of 6.5 million tonnes to meet its requirement fully. Also, a quantity of 6.5 million tonnes of locally produced complexes is adequate to meet requirement.

By 2002-03, India had achieved self-sufficiency in the production capacity of urea. However, the last five years have seen a sharp increase in consumption of fertiliser without any corresponding increase in domestic production. In 2007-08, approximately 25 per cent of the country’s urea demand was met through imports.

Currently SPIC Fertilisers & Chemicals Ltd is setting up a 400,000 tonnes urea plant in Dubai in partnership with the local players MCN and ETA.

Additionally, Indo-Egyptian Fertiliser Company (IEFC) is setting up a 450,000 tonnes phosphoric acid plant in Egypt in association with IFFCO and El Nasar Mining Co of Egypt with a 100 buyback arrangement by the Indian company IFFCO. The plant is set to commence commercial production by 2010.

Also, Tunisian Indian Fertiliser Company (TIFERT) SA is setting up a 360,000 tonnes phosphoric acid plant in Tunisia in joint venture with GSFC, CFL, GCT and CPG of Tunisia with 100 per cent buy back commitment by GSFC and CFL. The plant is likely to be commissioned by the end of the current year.

Presently, there are 56 large plants in India manufacturing a range of nitrogenous, phosphatic and complex fertiliser, and about 72 medium and small-scale units producing single super phosphate (SSP). In the beginning of 2008, India had an installed capacity of 12.1 million tonnes of nitrogenous fertiliser and 5.7 million tonnes of phosphatic fertiliser.

However, in the current regulator environment, the expected surge in domestic gas supplies mainly from Reliance Industries Ltd (RIL) operated KG D-6 field would address fuel concerns for urea to a great extent, the report said.