CHAOTIC FERTILISER POLICIES
During the last five decades, the fertiliser industries in India have received a lot of attention from the Government and the Planning Commission. Perhaps, fertiliser is the most discussed industry in India.
Inspite of this, fertiliser industries continue to remain uncertain and confused, not knowing the direction in which it should move in future. On the one hand, number of fertiliser units remain closed largely due to quixotic pricing policy of the government, unremunerative profit realisation and high feedstock cost. At the same time, instead of reviving the closed units,the government is taking steps to set up more number of fertiliser projects in India to reduce the level of imports.
With regard to subsidy policies, there are some fertilisers like urea and single super phosphate which have received considerable attention and support from the government but there are other fertilisers like ammonium sulphate which are equally important but have not been given necessary subsidy support by the government. As a result, Indian fertiliser industry is largely oriented towards urea, which is a nitrogeneous fertiliser, though sulphur depletion in the soil is now reaching alarming proportion. There is no indication that government is taking active steps to promote different nutrients in balanced manner for soil application.
Meanwhile, the import of urea is going up steadily, with India considerably depending on the international producers for meeting its requirements of fertilisers. Self-sufficiency in fertiliser production still remains a distant dream.
While this is the scenario with regard to demand supply condition, feedstock for fertilisers is also becoming the subject of uncertainty.
Government of India took a decision earlier to convert all the fertiliser plants in India to operate based on natural gas by 2010. This decision was taken, inspite of the fact that one would not know from where the natural gas would come from. Plans for ensuring availability of natural gas and setting up of LNG terminals at different locations in India have not been implemented with the urgency that it deserves.
Now, the shortage of natural gas in India is forcing fertiliser companies to partially switch to naphtha, setting back Government efforts to convert all the fertiliser plants to use natural gas as feedstock by 2010.
Despite Government’s plans to phase out naphtha as feedstock for fertiliser units, the fertiliser industry may end up using 10 to 15 percent more naphtha this fiscal year, which in turn would mean that less of the naphtha will be available for export.
Naphtha consumption for fertiliser may cross 3.2 million tonnes in the year ending March 31, 2008 compared with less than 2.7 million tonnes in the last fiscal year.
Naphtha usage was going down in the first half of the year, but now, it is increasing as the power sector is consuming more natural gas, which has created shortage of natural gas for the fertiliser sector.The Ratnagiri power plant (formerly Dabhol) has increased its use of natural gas, as it boosted generation capacity.Since the start of Ratnagiri project, spot natural gas has been unavailable for several fertiliser units
Several fertiliser units are now substituting almost 20 percent of natural gas needs with naphtha.
The government is also not paying adequate attention to the utilisation of urea adequately.The annual consumption of urea is of the order of 24 million tonnes. Only 50 percent of this is effectively utilised by plants, which means 12 million tonnes is wasted. The wastage can be reduced considerably by promoting the use of neem coated urea. The subsidy on urea is Rs 360000 million. During the current year, India have imported 4 million tonnes of urea. Supplementing even 10 per cent of this will result in huge savings.
The NEEM foundation has recently pointed out with concern that the Government, while accepting neem coated urea, is providing subsidy for urea but not for neem.
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