COMMENTARY ON PARIS CLIMATE CONFERENCE

Nandini Consultancy Centre, a chemical engineering and chemical business consultancy organisation based at Chennai and Singapore, has just released a commentary on Paris Climate Conference under the title

“ Tall targets and uncertain strategies of the Paris climate  conference and India’s ambitious targets”

The commentary, that consist of 214 slides with figures, tables and analysis, discusses about the complex issues involved in global climate management and critically reviews the targets and strategies arrived at Paris climate conference (COP21).

The promises made by India with regard to climate management has been discussed in detail,  particularly with regard to impediments on the way and the feasibility of attaining the target.

Various aspects discussed in the study include the following :

  • Past and present climate scenario and its impact
  • Grave future scenario, if climate change remains unmanaged
  • Various challenges in tackling climate change issues
  • Details on past climate agreements in the world forums
  • Intended Nationally Determined Contribution (INDC) of several countries for climate management
  • Key positives and shortfalls of targets and strategies proposed in the COP21 conference
  • Critical examination of India’s ambitious promises and the feasibility of fulfilling them
  • Need for appropriate strategies by India to meet the twin objectives of meeting the emission mitigation target and tackling impending energy crisis
  • Where would the world go from here?

ABOUT THE AUTHOR

Swaminathan Venkataraman, Chemical Engineer & MBA, with around twenty years of standing experience in Europe and Singapore, in functions related to Chemical Business Management and Environmental issues.

He is now Director, Nandini Consultancy (S) Pte. Ltd., Singapore.

HIGHLIGHTS

Highlights of the commentary are given below.

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HIGHLIGHTS OF THE COMMENTARY ON PARIS CLIMATE CONFERENCE

After the initial excitement and euphoria over the draft agreement on climate issues arrived at the Paris climate conference, careful study of the proceedings, deliberations and agreements arrived at the conference, cannot but make one suspect that the conference may have ended as a talk show,with several uncertainties and conflicts of interests remaining unresolved.

Paris climate summit acknowledges the need to aggressively address climate change, but it fails to detail with clarity as to how that will be done.

Aggregate pledges to reduce greenhouse gas emissions made by the nation states of the world fail far short of what is needed to begin to address the looming catastrophic climate change.

Interest and responsibilities of the participating countries diverge widely, ranging from the post industrial economies of the global north to industrializing nations such as China and India to the most vulnerable nations already facing climate change disruptions such as Kiribati, Tuvalu and Vanuatu.

US$ 100 bn funding has been promised by developed countries to help the developing countries to achieve the target for climate management. However, there is no binding agreement to do so and it is viewed as voluntary offer.

Agreement fails to acknowledge the need to decarbonize the world economy, by not mentioning fossil fuels such as crude oil, coal in the agreement.

The agreement sets a floor on conduct of countries but not the ceiling on what people in the world  have a right to demand from the governments of the world.

Targets fixed during the conference remain voluntary and the required actions are unspecified  and appear daunting.

The decision to conduct review of a 1.5 deg C warming limit by 2018 may come too late, as the world is well on the way to 1.5 deg C with present greenhouse gas levels. It now appears that staying below 2 deg C warming is in itself a formidable task.

Paris deal may be the best deal that could have been struck given the limits of the political economic environment, but that does not mean that it has done what is necessary to protect the life support systems of the actual environment.

Economic risk

Economic impact of large scale reduction of reliance on fossil fuels is untested and not clear and have been conspicuous by lack of detailed discussions during the conference.

Political risks – Political direction of USA?

Currently, in USA all the leading Republican candidates for 2016 Presidential election oppose significant policy measures to mitigate climate change and most have distanced themselves from mainstream scientific views.

A new skeptical Republican President may abandon Obama Administration’s current climate change commitments, including its emissions reductions target for 2025 and, in effect may withdraw support for the Paris Agreement. He may undermine Environmental Protection Agency’s efforts via the Clean Air Act to curb emissions from power stations. If Republicans retain clear majorities in the House and Senate after 2016, additional legislative and fiscal initiatives to thwart mitigation efforts are highly probable.

Political risks – Political direction of China?

Will China stick true to its commitment if it faces a large economic downturn as is forecast by leading economists, as it is  shifting from a manufacturing/investment led to consumption led economy

Will the talk lead to results ?

Real work on decisions made during COP21, has to begin now and in earnest globally by all major countries. Agreements-in-principle needs to be translated into action by individual member countries. Developed nations need to determine their projected peak emissions level plan with urgency

This requires more specific and aggressive policies in a massive expansion of clean energy investment and industry needs to plan to shift away from fossil fuels.

While developing nations are allowed more flexibility due to rising population and pollution levels due to economic growth, they need to make a careful assessment of total cost of polluting with fossil fuels and the cleanup thereafter and hence decide their fossil fuel based energy profile carefully.

The first revisiting of 2025 and 2030 goals will come in 2018, with another stock taking review in 2023.

Going by current trends in global warming, the earth would have become warmer in 2018 by 0.1deg.C compared to 2015 levels, moving closer to the target of 1.5 deg C warming levels. There is little time to act.

India’s ambitious promises

India has promised to build total renewable capacity of 175 GW by 2022 and  create an additional carbon sink of  2.5 to 3 billion tonne of CO2 equivalent through additional forest and tree cover by 2030.

Considering the past track record with regard to capacity build up, land acquisition issues, technology challenges and the fact that several measures to achieve the target are still in the planning stage in the beginning of the year 2016, it appears that it would be a herculean task for India to reach the promised target by 2022.

CLIMATE PACT CLEAR ON TARGET BUT NO STRATEGY NOT YET

After the climate pact in  Paris, there appear to be an euphoria amongst 120 participating nations, as if the climate crisis and global warming threat have been sorted out once for all in one stroke.

A careful reading of the pact would  make one realise that what has been achieved was to agree on a target of adopting the goal of well below 2 deg.C for temperature rise  and followed by discussions on  financing of developing economies to help make the transaction. The agreement which is scheduled to go into effect from 2020 is only a system of voluntary pledges made by individual countries to limit their green  house emissions.

The Paris Pact  requires developed countries to raise finances of  $100 billion  per year as floor level by 2020 to help the developing countries in  their mitigation activities. There are also series of deadlines for review and discussions. Nothing really has happened beyond this, for all practical purposes.

It is conspicuous that the impediments in achieving the target have not been discussed in depth or even broad road map developed for the purpose. There is still considerable difference of opinion as to which countries contribute more to global warming and also definite view of a few developed countries  that some of the highly populous developing countries with unchecked population growth can be  a stumbling block for achieving the target.

It has been vaguely said that the substitution of  the use of fossil fuels by renewable energy can be a game changer. But, there is no indication how this would be achieved on a global scale to the level of the need. The world is still largely dependent on the use of coal, natural gas and crude oil for it’s energy needs and feedstock requirements. No one seem to have thought of stressing the need for providing a time bound target for the reduction of fossil fuels, which would  considerably  affect the economy of several countries including U S and middle east.

The technology required in large industrial scale for substituting the fossil fuel by alternative clean energy source is not adequately developed as yet. Today, the share of renewable energy in the overall energy production in the world is a fraction of a miniscule. The world still have a very long way to go  in this regard.

Substituting the fossil fuel by alternate eco friendly energy source call for closure of several industrial and economic enterprises today largely dependent on fossil fuel. Can the world afford this and will not such massive closure of fossil fuel based  enterprises  destabilise the world economy to a disturbing level ?

There have been lot of  congratulatory noise both from the developing countries and developed countries , on raising of  100 billion USD by developed countries at the floor level  to help the developing countries. This “strategy” appear to have pleased the developing countries as if they won the battle and the developed countries as if they have done their duty to  check climate change. But, this “strategy “ cannot be a substitute  for developing a proper strategy from the technology front which is a real challenge.

While it is a fact that in a conference of a few days , such strategies cannot be evolved to meet the challenge, it would have been appropriate if the climate pact has made a reference to the challenges ahead, instead of thinking that fixing target is achieving it.

When such global pact are signed, it is appropriate to duly consider the various aspects of ground realities  including the conflict between nations, severe competition between countries to sell their products and technology , some of which may not meet global standards, the prevailing un hygienic conditions in several developing countries, lack of adequate education and understanding by the population in several countries and  fissiparous tendencies in several countries due to multiplicity of political forces etc. Proper and honest highlighting of such points will give greater confidence to the world population that Paris pact is not a mere wishful pact.

BILL GATES’ SCEPTICISM ABOUT RENEWABLE ENERGY AND MODI’S TARGET OF 175 GW BY 2022

Even the pledged admirers of Bill Gates, widely acclaimed as the greatest innovator and philanthropist of present time, would be surprised to know about the cynicism of Bill Gates  on the potential benefits of renewable energy for saving countries like India from an impending energy crisis and to provide the ecological gains to mankind by ensuring  reduction in use of fossil fuel (coal, oil, natural  gas), that cause global warming.

On careful reading of the speech of Bill Gates , his admirers may give him the benefit of doubt, and state  that he was just thinking aloud and even before crystalising  his  thoughts, he  blurted out  his views in premature manner. There is no doubt that  the negative views of Bill Gates on renewable energy are ill advised  and certainly is not in tune with  reputation that he commands.

At the same time, it is gratifying to note that Indian Prime Minister  Narendra Modi  has fixed renewable energy target of 175 GW for  the year 2022, during his recent speech in the Paris Climate Conference.

Given the past experience in India of fixing the target and not achieving them even half way on several occasions, many people may suspect that  the Prime Minister may be unreasonably  ambitious . Perhaps, those who admire Narendra Modi for his capability to think big and  his habit of announcing   tall  targets in dramatic manner, may say that the Prime Minister  has fixed target of 175 GW of renewable energy by 2022, with the objective of enthusing the countrymen to work towards such big target and work hard  to achieve it. Probably, he has thrown the target as challenge for the Indian administrators,   scientists and technologists.

However, a careful analysis of  renewable energy potential in India would make it evident that such target of 175 GW is reasonable , much needed and  well within the achievable capability  of India.

Present scenario and the  huge target

The present scenario is  that India has around 38,O96 MW of renewable power , consisting of wind power of 24,677 MW, solar power of 4579 MW, small hydro power of 4161MW, bio power of 455O MW and waste to power of  127 MW.

Given the target of 175 GW by 2022 and  the present capacity of  around 38 GW, India need to build renewable energy capacity of around 19 GW every year between 2016 and 2022. Is it possible ? It is possible, if Modi government would be able to pursue the task with great determination, focused attention, innovative approach and creation of appropriate public opinion in favour of such target.

By fixing the target of 175 GW of renewable energy by 2022, Narendra Modi has placed himself and his governance capability on trial.

India has the on shore  wind power potential of  around  103 GW  .With around 7600 km of coastal line, India has the potential of  around 350GW of offshore wind power.

India has the advantage in terms of higher solar radiation compared to  countries such as Germany, USA, Japan, Australia, Italy, which have made significant progress in solar power segment in the recent years. Potential of solar power in India is as high as 5000 million kilo watt hour per year. Small hydro power potential in India is around  20 GW.

 Obviously, Modi government has to largely rely on the capacity build up of wind power and solar power to achieve the target of 175 GW by 2022. It has fixed target of 100 GW of solar power by 2022.

Challenges ahead

There are challenges ahead and obviously Narendra  Modi  must be  aware of this daunting task when he fixed the target of 175 GW by 2022.

One MW of solar power capacity needs land area of around 5 to 7.5 acres. Similar extent of land area would be required for onshore wind power also.This means that  more than one lakh acre of land have to be made available for building up around 19000 MW(19 GW) of renewable power capacity every year. Such land has to be acquired without disturbing agriculture farm holdings.

Ofcourse, there are lakhs of acres of unused and wasted land available in the country and such land has to be identified and put to use for building up the renewable power projects. The suitability of the land for the purpose also need to be ascertained.

Another big challenge is the building up of grid capacity in tune with the capacity build up for renewable power, so that the generated power can be handled.

Building up of capacity of 19 GW per year and creating  the required additional grid capacity will call for investment of around  Rs.1,50,000 crores per year. As the year 2016 will commence in the next few days,  we see a scenario where no provision has been made to have the necessary investment to build the envisaged renewable  energy capacity every year.

There are other issues such as absence of any production capacity in the country  for polycrystalline silicon, which is one of the essential input material for solar cell. One MW of solar power capacity would need 20 tonne of polycrystalline silicon.

Though some initial steps have been taken to build offshore wind power project in coastal  region of Tamil Nadu and Gujarat, it is still in very preliminary stage.

Let the nation strive to achieve the target

While one can say that Narendra Modi’s  target is technically achievable and the doomsayers would  very much doubt that the target can be achieved, the nation would be well advised to believe that target would be possible and it should  strive towards achieving the target to the best of its ability, notwithstanding  whatever may be the views of Bill Gates .

CLOSURE OF SHASUN PHARMA UNIT AT CUDDALORE

Recently, a grave accident has taken place in the factory belonging to Shasun Pharmaceuticals Limited at Cuddalore in Tamil Nadu   in India. One  person was charred to death and three others were injured in a fire that broke out  in the  shop floor.

 It is reported that the employees were working in the production block located in the 3rd floor of the factory, when fire broke out after hexane spilled  over from a tank. The employee who tried to remove the chemical with the help of a bucket was charred to death in the fire.

 A day after the accident , Tamil Nadu Pollution Control Board(TNPCB)  served the closure order on Shasun Pharmaceuticals Limited’s Cuddalore plant for non compliance of conditions..

Immediately after the accident , local politicians agitated against the unit. An NGO  said that closure of the unit was  a welcome move and  it  insisted that the government  should also prosecute the people responsible for the accident.

Practices  abroad

 A number of industrial accidents do take  place around the world. Inevitably,  they  are followed by detailed enquiry. In some cases, the factory management have been judged as  not complying  with the regulations  or negligence and heavy penalty were  imposed. Closure of factories as an impulse decision of the authorities are never allowed. If factories were to be closed, it would be done only after conducting detailed enquiry and based on the findings.  In many large global companies such as DuPont, BASF and others,  accidents have taken place,  but they were never asked to be closed.

 Lack of consistent policy in India

In India, in the case of many small units such as small explosive units, fire cracker units in places like Sivakasi ,  in the event of an accident ,the owners and directors are immediately arrested by the local police, even before conducting an  enquiry  and they are put behind the bar for several days. However, in the case of medium and large companies , the executives  are rarely arrested . In the case of public sector units ,when accident takes place, the Pollution Control Boards  never order closure of units and the police never arrest the directors. Obviously, authorities seem to be making distinction between small units and big units and between  the public sector and private sector units. Several case studies can be readily  pointed out to  illustrate such conditions.

 Kneejerk reaction

 The decision of  TNPCB to order  the cutting of power supply and total closure of the chemical factory of Shasun Pharmaceuticals Ltd  at Cuddalore appear to be kneejerk reaction.

It is necessary  that detailed  investigation should be conducted  wherever and whenever such  accidents take place. Immediate closure of the unit even before detailed enquiry appear to be a case of arbitrary use  of  power by TNPCB. There are number of statutory bodies like TNPCB and Inspectorate of Factories etc. who   are supposed  to monitor the safety standard of all industrial  units. One wonders  as  to  what is the responsibility of such statutory bodies in the case of  such safety issues.

 Shasun Pharmaceuticals Ltd.  has excellent track record and it is an important producer of sophisticated pharmaceutical products,  which are  exported around the world . It’s unit at Cuddalore has approval of its facilities from US  based FDI and several other overseas organizations of standing.  Closure of such unit would  inevitably  render the unit sick, cause  loss of  employment for people and loss to  several  organizations who depend on Shasun Pharmaceuticals for sourcing products etc. This will also lead to loss of income to the state by way of taxes and duties.

Conduct quick enquiry

 Having taken decision to close the unit  of Shasun Pharmaceuticals at Cuddalore by TNPCB , it should  immediately appoint competent agency to quickly look into the problem and  ask the unit to implement appropriate  remedial measures  in time bound manner and  TNPCB should allow the unit to reopen  atleast in next 10 days. TNPCB should realize that it’s responsibility to ensure environmental standards  should not be viewed in  isolated manner and it should have holistic outlook. Certainly, TNPCB should not approach the issue as if the factories in which accident take place should be suspected.  On the other hand, it should realise that such accidents may  take place in spite of the precautions  taken by the units and safety measures implemented.

Need for appropriate policy towards industrial accidents

Government  of India should carefully examine the accidents in  the  industries  and evolve a policy approach as to how to handle such situations by government agencies. It should not be left to the local police or the Pollution Control Boards to take a view as it deem fit in it’s wisdom.

It is possible that different persons at different times in these bodies may take a different view.

Appropriate government policy is necessary to   view the issue in proper perspective , so that the kneejerk reaction of the government agencies would not result in industrial promoters developing  cold feet in promoting and running industrial projects.    

NEED FOR KNOWLEDGE MANAGEMENT IN CHEMICAL INDUSTRY

Knowledge management is a worthy function in chemical company, fully justifying its resource requirement.

Knowledge management will remain a core component for any efforts to improve efficiency, to innovative or to provide more response to the market needs and to the clients.

Knowledge management can not be over looked by any chemical company that desire to improve profitability and competitiveness.

Integrating global economy

In view of the environmental compulsions, changing consumer expectations and emerging technologies, chemical industry is undergoing see change globally. Product development efforts, technology optimisation measures and energy management techniques are being continuously updated by chemical companies all over the world to maintain the competitive edge and remain in the race.

As the global economy is increasingly and rapidly getting integrated, possession of updated global knowledge with regard to various developments in chemical and allied industry has become a matter of vital necessity for chemical industry professionals all over the world.

Today, chemical professionals are living in era of global compulsions and there are major challenges to be met. They have to strive in competitive global environment that have cultural diversities and concept of universal citizenship in an increasing globalising community.

Investment focus of multinational companies in developing countries

Further, with the market in developed countries getting saturated  due to near stagnant population and lack of adequate land area in the region, multinational companies are looking forward to invest in developing countries in Asia and Africa, where the need of the population is high, though the purchasing power of the natives are still poor.

In such scenario, multinational companies desiring to invest in developing countries to sustain their growth, have to necessarily  reposition themselves in tune with prevailing conditions in the regions.

 Challenges and opportunities for chemical professionals

In this scenario, chemical industry professionals have huge opportunities as well as challenges, Obviously, they can not remain isolated or remain pre occupied only with local conditions, as the competitions are becoming global.

The preconditions for the chemical industry professionals to competently manage the challenging scenario is to pay great attention to the task of knowledge management.

Knowledge management is an integrated subject, requiring cross assimilation of latest technology practices, emerging substitution possibilities, changing consumer preference, modern management practices, apart from complete understanding of the trends in the policies and programmes of the various countries and sociological issues in different regions.

To succeed in the competitive environment, substantial level of business knowledge and expertise on global scale is required by chemical industry professionals.

Leadership of chemical industry is judged non only on the basis of technical competence and strong knowledge of the company’s products as well as corporate structure but also based on the broad understanding of the cross section of activities and developments in a number of related fields and awareness about the cultural variations in different regions.

The knowledge level of the chemical professionals should be quite broad, even if this means that in certain areas, it may not reach the required depth.

 Need for knowledge management expertise in chemical companies

To have knowledge management expertise at adequate standards, the chemical companies necessarily need to create a forward looking think tank in the organisations.

Certainly, knowledge management team has to be different from corporate planning group.

While the corporate planning group is involved in working future growth strategies, the knowledge management team operates with wider perspectives and in larger areas.  Knowledge management team will be orienting and fine tuning the company’s philosophy itself, in taking an overall view of the developing global scenario and the desired strategies on how the company should position itself in the global sphere in the short and long term.

 India needs to focus on knowledge management

India needs to focus on intellectual value creation and not just in developing a manufacturing base.

Unfortunately, one gets  an impression that India is not using its massive pool of talent to create new technologies, which is possible only by strengthening knowledge management base.

Only when India assumes the status of a hub for intellectual property and knowledge management, will its manufacturing base be competitive in a world that values innovation.

NEED FOR SPECIAL FOCUS ON AGRO CHEMICAL PROJECTS

Indian agriculture sector has been moving from one crisis to another, which is  evident  by the spate of farmer suicides during the last several years.

John Galbraith, a renowned  economist and former US ambassador of India said several years back, that Indian economy is largely dependent on performance of agriculture sector, which, in turn, is dependent on weather and seasonal conditions.

 Agricultural sector is  affected if  it rains too much or if there is drought. Though vulnerability of Indian agriculture sector to seasonal conditions are well known, during the last six decades of independent India, successive state and central governments have not been able to find solution adequately for this vexed issue confronting the Indian agriculture sector.

 Obviously, there is urgent need to stabilize the Indian agri economy and put it on firm rail, that would help in sustained economic and social growth, employment generation and equanimity of income and opportunities to a large extent.

 What is urgently needed is to make agricultural  operation more remunerative or atleast as remunerative as industrial operations and business in services sector.

 One obvious method of achieving this end is to promote large number of agro chemical projects in India, which would lead to the production of eco friendly products in a significant way and can also be substitute for petrochemicals(which are not adequately produced in India due to feedstock constraints or ecological issues). Unfortunately, no specially focused attention have been paid to boost the agro chemical projects in the country so far.

 Agro chemicals from tapioca, maize

 There are many agro chemicals that can be produced from tapioca or maize based starch such as sorbitol, L-lysine, lactic acid / poly lactic acid, citric acid and several others, which are not adequately produced in the country. India remains net importer of these starch based chemicals.

 Agro chemicals from castor seed

 India is a large producer of castor seed in the world and is largely exporting castor seed and castor oil without much  value addition. There are exciting possibilities of producing value added chemical products from castor seed including polymers that would be game changers for the Indian castor industry. China and Brazil, which are also large producers of castor seeds, are now focusing on such value added products from castor seeds.

 Agro chemicals from sugarcane

 India is a large producer of sugarcane and there are many sugarcane molasses based products that can be profitably produced including industrial ethanol, that can lead to several downstream products, which are petrochemical substitutes . Unfortunately, molasses are being converted largely into alcohol for human consumption.

 Algae based products

 Algae is very important and  quick growing crop, that can be cultivated in tropical conditions that are  prevalent in India. Algae cultivation needs only waste water, carbon dioxide and sunlight, which are all abundantly available in India. Several species of algae contain more than 35% of oil. Bio fuel can be produced from algae by extraction  from algae bio mass. Residual mass can be subjected to anaerobic digestion to produce methane gas (natural gas), which can be used for power generation. After anaerobic digestion, the remaining mass can be subjected to fermentation to produce ethyl alcohol and several ethyl alcohol derivative products. India is reported have more than 40 million hectares of waste land and algae can be cultivated in atleast two million hectares of waste land. Several integrated algae based projects can be set up in various parts of the country, that will significantly lead to all around development including improvement in rural economy.

Integrated algae based projects that involve cultivation of algae, production of bio fuel, setting up of power plant based on methane gas and production of ethyl alcohol can be promoted  atleast in  one hundred locations around India. Each of such integrated project with economic viability will  call for investment of around   Rs. 120 crores.

 So many opportunities

 There are so many other   attractive agro chemical investment opportunities, that remain to be utilised.

 Farmers need guidelines

 Indian farmers should be given  continuous guidelines  by government of India with  regard  to choice of crop they should cultivate to get maximum returns..  Such decisions are  now  taken by farmers  largely  as community decision at local level based on the views of senior members.  It would be appropriate if the Government of India would provide guidelines to the farmers in various parts of India from time to time about the choice of crop for cultivation based on demand supply forecast, price forecast, monsoon forecast etc. The policy of government of India with regard to the support mechanism for various crops can be evolved from time to time, with reference to the above forecast and guidelines.

 Need for pro active and appropriate approach

 Government of India should apply it’s mind to make Indian agriculture more broad based and more remunerative.

 Indian agri sector need innovative approach to sustain it’s growth and promotion of agro chemical projects is the best way of doing so. Government of India has a very important and significant role to play.

INDUSTRIAL ACCIDENTS IN TAMIL NADU ( INDIA ) IS NOW TOO FREQUENT

The recent accident in a tannery in Ranipet in Tamil Nadu resulting in the death of ten workers is yet another sad industrial accident that has taken place in Tamil Nadu.  Serious industrial accidents causing deaths  are now reported very frequently particularly in Virudhunagar  , Sivakasi region , where number of  fireworks and match units in unorganised sector are operating.

While the government routinely orders  an enquiry and arrest the factory owners in such cases, little news come out about the findings of the enquiry committee. In several cases, the factories are allowed to reopen after some time. Obviously, no lessons are being learnt and no actions are being taken to avoid recurrence of such accidents causing loss of lives.

All such industrial accidents take place due to the  non observance of  even minimum safety standards. The workers are rarely trained in safety measures and on many occasions are not provided the necessary safety uniforms and kits.   No accidents take place without reasons  such as non observance of safety rules. 

Industrial safety regulations are well standardised and have been carefully developed over the years. The government has also appointed number of regulatory and inspection agencies  and has strict code and reporting practices. There are number of government departments like electrical inspectorate, boiler inspectorate, factory inspectorate , health department , pollution control board etc., which are  duty bound to monitor closely happenings in the factories and ensure that the rules and procedures are adhered to.

While the factory managements who  fail in their commitment  to safety standards  resulting in such accidents are punished , the government officials are rarely asked to accept responsibility for non enforcement of regulations. Concerned senior officials at the level of secretaries rarely visit the factories for any surprise checks and to ensure that the government officials at lower level do the duties properly.

In the event of such accidents, the enforcement officials at  various levels should also be held responsible for the accidents and the present practice of the officials blaming everybody except themselves, should not be allowed to go on.  Just like the factory managements, the officials also need to be punished for failing in their enforcement procedures after  proper enquiry in quick time.

Obviously, if the enforcement would be strict and officials would do their duty as per the procedures efficiently and  honestly, the management of the factories will be much more careful and that would avoid such accidents and loss of innocent lives.

GOVERNMENT OF INDIA’S INACTION CAUSE UREA FERTILIZER UNITS IN SOUTH INDIA TO BECOME SICK

While the Government of  India is all the time stressing  that the pace of industrial and economic growth in the country should be accelerated, it is shocking that the inaction of the Government of India have forced the  three important urea fertilizer units in South India namely – Madras Fertilizers Ltd, (Chennai) Southern Petrochemical Industries Corporation (Tuticorin) and Mangalore Chemicals and Fertilizers Ltd (Mangalore) to remain closed since October 2014.

As the cost of production of urea from  naphtha is higher compared to that of natural gas as feed stock, Government of India insisted that subsidy would not be made available to the units that use naphtha as feedstock beyond September,2014. Out of 33 fertilizers units in India, the three naphtha-based urea manufacturers in south India  do not have linkage to gas grid and hence have to depend on naphtha for production of urea and ammonia. Therefore, the three units in South India were forced to stop operations, as they have no access to natural gas.

Helplessness of the units 

These three urea  fertilizer units have already  made considerable investment to convert their facilities for using natural gas as feedstock instead of naphtha. Now, the units are in a position to switch over to production of urea based on natural gas as feedstock.

However, due to delay in the completion of natural gas pipeline and  non availability of natural gas, these units are unable to switch over to natural gas as feedstock. While the rest of the fertilizer firms in the country have access to natural gas, these three firms in South India are unlikely to get natural gas till 2018.

What is particularly surprising is the fact that inspite of knowing very well that there is no feasibility for getting natural gas by these units in the immediate future, the Government of India has given a time bound schedule to switch over to natural gas, particularly when  the situation is beyond the control of these units.

In the case of Madras Fertilisers and SPIC Ltd in Tamil Nadu, there is no way of getting natural gas in the next few years. Krishna Godavari basin in Andhra Pradesh is unable to step up the production of natural gas. Pipeline for transporting natural gas to Tamil Nadu from Andhra Pradesh are also not ready. Kochi LNG terminal is now remaining stranded due to suspension of  gas pipeline project in Tamil Nadu by GAIL authorities. Proposed Ennore LNG terminal in Tamil Nadu remains only in the preliminary stage. In this situation,  insisting that these South India based urea fertilizer units should  switch over  to natural gas as feedstock is unreal and ironical.

Price of naphtha and government’s advice

The export price of naphtha had dipped to Rs.39,000 per metric tonne from Rs.57,000 per metric tonne due to crude price fall.  The import parity price is about Rs.45,000 per metric tonne.

Urea fertiliser  units in south India have been paying around Rs.60,000  per metric  tonne of naphtha  earlier. Due to the price fall of naphtha, there is scope for reducing the price of naphtha supplied to the fertiliser units by naphtha producing companies in India.

Even as the price of naphtha has come down, the Petroleum Ministry appears to be moving at snail’s pace and reported to have  sent a communication to these three firms in South India  to finalise the naphtha price and other terms and conditions with the naphtha producers, to enable the units to avail subsidy and restart the operations  It is also reported to be insisting on new conditions such that the state government should forego VAT for naphtha.  Even as the government of India is endlessly deliberating about the matter, the units remain closed causing loss of several crores of rupees of production. The lack of sense of urgency on the part of government of India in solving this issue is too conspicuous to be ignored.

It is sad that instead of enabling the units to continue operations without closure earlier  by not withdrawing the subsidy, the government of India has done nothing to help these units beyond advising them now. Such closures have become costly both for the units and the country and Government of India is solely responsible for this.

Indian urea scenario :

Indian demand for urea:    Around 30 million metric tonne per annum

Indian production:                               Around 22 million metric tonne

 

Year Import Production
Million metric tonne
2010-2011 6.610 21.120
2011-2012 7.834 21.872
2012-2013 8.04 21.99
2013-2014 7.08

 

India is a large consumer of urea and Indian import of urea is around  8 million metric tonne per annum. Realising the need to increase the production capacity of urea in the country, the Government of India is taking special steps to bring back Talcher  urea plant of Fertiliser Corporation of India back into operation, with the proposed investment of around  Rs. 8000 crores

At the same time, paradoxically, Government of India appears to be unconcerned as for as the three fertilizer units in South India are concerned which are now remaining closed.

It takes three to four years to conceive, design, install and commission a new  urea project. While it takes such a long time to implement a new project, closing down the existing fertilizer units can be done by a stroke of pen, simply by a bureaucratic decision , as has happened in the case of the three urea units in south India.

The damage has been done.

Installed Capacity of the units not in operation in south India

Name of the unit Installed Capacity

(metric tonne)

Madras Fertilisers 4,86000
SPIC 620000
Mangalore Chemicals & Fertilisers 3,79,500

 

The damage has already been done, as the three urea units remain shut down for over three months now. Workers are remaining idle and thousands of tonne of urea production from these three units have been lost, even as the country is spending millions of dollars in importing large volume of urea year after year.

While the fact is that the cost of production of urea from naphtha is higher than that of natural gas as feed stock and the subsidy expenses  to the  government of India payable to the naphtha based units are higher, the overall cost to the country due to the closure of the well run urea units in south India is very high. Obviously, the government of India had withdrawn the subsidy support to the naphtha based units without conducting an adequate cost benefit analysis.  The present  government  of India has erred by creating a situation where the urea units in south India had to remain closed for over three months now and even at present there is no  firm indication as to when they would be restarted and what would be the subsidy policy of the government of India towards them.

Better late than never and without allowing the units to remain closed for more period , that would cause the units to become sick making the revival difficult, the government should act without losing a day more.

ALL INDIA ESSAY COMPETITION FOR COLLEGE STUDENTS ON “VALUE ADDED PRODUCTS FOR PRODUCTION FROM SEWAGE / MUNICIPAL SOLID WASTE AND APPROPRIATE TECHNOLOGIES”

Nandini Chemical Journal, a renowned online monthly journal published from Chennai by a team of chemical engineers announces  All India Essay Competition for college students on Value Added Products for production from Sewage / Municipal Solid Waste.

The Prime Minister’s call for Clean India Campaign has created a flurry of activities in the country towards achieving cleanliness in public places. There is urgent need to identify the appropriate value added products and suitable technology for manufacturing.

Nandini Chemical Journal is organizing the above All India competition, to give opportunities to college students all over India to study the subject in depth and provide their views and suggestions and recommendations.

All students studying   in Indian universities  at under graduate, post graduate and doctoral level  can participate in the essay competition. The essay should consist of maximum of 2000 words and should be written in English.  Five prizes would be awarded  to the best of entries.

Last date  & address details:Last date for submission of essay is 30th December, 2014.  Essay should be sent either by post or email to the following address

Nandini Chemical Journal, M 60/1, 4th Cross Street, Besant Nagar,

Chennai-600090

Email:- nsvenkatchennai@gmail.com ,nandinichemical@gmail.com

If you want complimentary copy of Nandini Chemical Journal, please let us know.

COLD CRACKING TECHNOLOGY TO PROCESS HEAVY CRUDE OIL

The lighter grades of crude oil produce the best yields  of end products. However, lighter grades of crude are fast depleting in the world.

Depletion of light oil reserves are shifting the focus of the oil industry towards heavy crude oil.

Oil refineries are increasingly having to process heavy and ultra heavy crude.

Heavier crude oil have too much carbon and not enough hydrogen. Processing of heavy crude oil requires high capital cost, operating cost and results in harmful emission. Existing processing technologies do not effectively address the issue.

Oil industry has been eagerly awaiting emergence of new innovative and cost effective technologies for processing heavier crude oil.

Pristec, an innovation based global company is offering technology solution to convert heavy crude into light synthetic crude.

Mr. P.N.Devarajan, a renowned chemical engineer of great repute has stressed the need for India adopting cold cracking technology to process heavy crude oil immediately.  For more details, please read Nandini Chemical Journal, December 2014 issue.

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