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UNPRECEDENTED GROWTH IN DEMAND FOR FERTILIZERS IN 2006


EFFORTS BEING MADE TO AUGMENT INDIGENOUS PRODUCTION OF FERTILIZERS - YEAR-END REVIEW - 2006, FERTILIZERS (MIN. OF CHEMICALS & FERTILIZERS)


 
The year 2006 was marked by all-out efforts by the Department of Fertilizers, Ministry of Chemicals and Fertilizers to meet the unprecedented growth in demand for fertilizers in the country. As directed by the Union Minister of Chemicals & Fertilizers and Steel, Shri Ram Vilas Paswan, initiatives were taken that would go a long way in augmenting indigenous production of fertilizers and better supply and distribution. For greater transparency, a web-based “Fertilizers Monitoring System” (FMS) was launched to monitor the production and supply of Phosphatic and Potassic Fertilizers in the country.

Demand and Availability

The current financial year has seen unprecedented growth in demand for fertilizers. The demand for fertilizer during the Kharif season as assessed by Department of Fertilizers was 122.37 LMT of Urea, 33.10 LMT of DAP and 14.66 LMT of MOP. This demand has substantially been met with sales of 113.65 LMT of Urea, 32.06 LMT of DAP and 9.99 LMT of MOP. This buoyant trend has continued during Rabi season 2006-07 with the assessed demand at a record level of 127.08 LMT of urea, 48.19 LMT of DAP and 18.57 LMT of MOP.
To meet this enhanced requirement of fertilizers, the availability from indigenous sources in respect of urea and DAP during the year is estimated at 200.37 LMT and 49.58 LMT respectively. The balance requirement will be met through imports. The current year plan is witnessing an import of over 34 LMT of urea other than approximately 18 LMT of imports from OMIFCO under the long term off take agreement. Similarly, in respect of DAP, the current year plan envisages import of 28 LMT.
The Department has arranged for evacuation of these imported fertilizers from ports to the various consuming areas in a timely manner, notwithstanding the fact that the country is also witnessing record import of wheat, simultaneously.
Urea Policy for Stage III, NPS

Efforts are also being made to augment indigenous production, particularly in respect of nitrogenous fertilizer. The recommendations of the Alag Committee have formed the basis of the proposed NPS III which aims at empowering the units for debottlenecking and expansion of their existing plants, inducing conversion from naphtha and FO/LSHS to gas-based plants and provides a sun-set clause for other than the gas-based units. This policy is in the final stages of approval.

Phosphatic fertilizers

As regards phosphatic and potassic fertilizer, the Department has adopted the normated formula recommended by the Expert Group, chaired by Prof. Abhijit Sen for determining prices of phosphoric acid based on internationally prevailing price of imported DAP and ammonia. Notwithstanding the constraint of raw material in the international market, the indigenous production of phosphatic fertilizer in the country during the current year 2006-07 is likely to be at a record level.

Web-Based Monitoring Mechanism

A web-based “Fertilizers Monitoring System” (FMS) has been launched to monitor the production and supply of Phosphatic and Potassic Fertilizers in the country. The public domain of the Web-site (www.urvarak.co.in) provides dynamic data with regards to the dispatches and sale of fertilizers by various manufacturers/ importers in the country to different parts of the country. This is an effort of the Department to place the complete distribution network in public domain to induce transparency in supply and distribution of decontrolled fertilizers.
Joint Ventures Abroad
As the cost of gas in countries, such as Kuwait, Iran, UAE, Nigeria etc., which have large reserves of gas, is less than the comparable cost of APM NG of about US $ 2.5-3.0 MMBTU and PLL’s RLNG price of about US $ 5/MMBTU, the Department is exploring the possibilities of setting up urea JV projects abroad with buy back arrangements or for entering into long-term arrangements for procuring feedstock from abroad.

The Department is holding negotiations with Kuwait, Vietnam, Saudi Arabia, Iran, Myanmar, Syria, Nigeria and Angola for exploring the possibilities of setting up JVs in these countries or for tying up long-term supplies of natural gas etc. We are also looking for their collaboration in revival of closed urea units. Similar JVs in respect of raw materials/ intermediates and finished phosphatic/ potassic fertilizers are also being explored in Jordan, Saudi Arabia, Tunisia, Egypt, Algeria, Morocco, Togo etc.
Fertilizer PSU’s – Restructuring/Revival
The financial restructuring proposal in respect of Fertilizers and Chemicals Travancore Ltd. has been agreed to by Government, and necessary orders in this regard were issued on March 30, 2006. As regards revival of all units of Fertilizer Corporation of India Ltd. and Hindustan Fertilizer Corporation Ltd., the Department’s proposal has been referred to Board for Restructuring of Public Sector Enterprises for its consideration. Regarding revival of Pyrites Phosphates and Chemicals Ltd., draft Cabinet Note is under inter-Ministerial consultation.

NSD/AS/040107-Fertilizers-YEAR

 

 

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