Providing a breather to Deepak Fertilisers and Petrochemicals Corp. Ltd, and state-run firms—Rashtriya Chemicals and Fertilisers Ltd (RCF) and Gujarat State Fertilizer and Chemicals Ltd (GSFC)—the government may allow supply of pooled gas to these companies to manufacture phosphatic (P) and potassic (K) fertilisers. This comes in the backdrop of the National Democratic Alliance government focussing its energy on reviving the rural economy making irrigation and urea availability an important part of its game plan.
The government last year approved gas supply at uniform price to all fertiliser units for urea production through a pooling mechanism. However, the guidelines related to supply of gas to fertiliser units producing phosphatic and potassic nutrients are yet to be finalised. “Recently, the inter-ministerial committee, headed by the fertilisers secretary, decided that P&K manufacturers may be supplied pooled gas meant for urea production to manufacture P&K fertilisers as well. The matter has been referred to the minister for chemicals and fertilizers, after which it will need the Cabinet’s approval,” said a senior fertiliser ministry official on condition of anonymity.
Phosphatic fertilisers contain phosphorus in any organic or inorganic form, and include the commonly used di-ammonium phosphate. Potassic fertilisers are the ones which contain potassium in absorbed form. The commonly used potassic fertilisers include muriate of potash and sulphate of potash. “The government had earlier decided to charge the highest existing re-gassified liquefied natural gas price from P&K manufacturers. However, the inter-ministerial committee has come to a conclusion that it will not be viable for the companies,” said another government official from the ministry who also did not want to be named.
InfraCircle had earlier reported that the Union government plans to recover Rs. 15 billion as dues from Deepak Fertilisers, RCF and GSFC for using subsidised fuel to manufacture fertiliser.
In 2010, India implemented nutrient-based subsidy policy for phosphatic and potassic fertiliser producers. This resulted in market pricing of these fertilisers as opposed to urea, the most commonly used fertiliser in India, which is controlled and currently sold at a fixed price. Given the market pricing for phosphatic and potassic fertilisers, the government in 2014 decided to divert the subsidised APM gas to urea plants.
The so-called APM mechanism does not exist anymore and refers to the price of gas produced by state-owned upstream explorers such as Oil and Natural Gas Corp. Ltd and Oil India Ltd from the blocks awarded to them on a nomination basis. While APM gas supplies to Deepak Fertilisers were stopped as it was manufacturing complex fertilisers, the gas supply continued for RCF and GSFC as any cut in supplies would have affected urea production. These firms have stated to the government that their plants are configured in a manner that any stoppage of gas supplies would affect both urea, and phosphatic and potassic production.
Experts though think this is the right step, a mechanism is required to give pooled gas to P&K manufacturers. “The country imports significant amount of P&K fertilisers. So supply of gas to domestic entities will ensure domestic availability,” said Neeru Abrol, former chairman and managing director of National Fertilizers Ltd. Queries emailed to the spokespersons for the ministries of chemicals and fertilizers, and petroleum and natural gas, Deepak Fertilisers, RCF, GSFC and GAIL (India) Ltd on 10 August remained unanswered. The government has made a provision of Rs. 700 billion on account of fertiliser subsidies in the Union budget of 2016-17.
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