The Department of Fertilizers has been aware that gas is in short supply and LNG prices are high. What are the options open for the government to meet the demand for 30 million tonnes per annum of urea
India needs 30 million tonnes of urea every year to meet the current agricultural needs of land under cultivation. Domestic production of urea is about 22 million tonnes and the shortfall of 8 million tonnes is met through imports at an average cost of $400 per tonne.
Thanks to the long-term agreement signed with the Oman-India Fertilizer Company, we obtain 2.5 million tonnes from it, leaving 5.5 million tonnes to be obtained from other sources.
The allocation of natural gas to urea plants in India has been insufficient resulting in imports of LNG at about $20 per mmBtu (million metric British thermal units). The main supplier of gas, Reliance Industries has had a great fall in production, and it is hoped that this will increase now onwards.
It must be borne in mind that the price of gas in exporting countries is very low. For instance, in the case of Oman Oil Company's joint venture with Iffco/ Kribhco, gas is supplied by it at $3 per mmBtu, which, due to the high cost of liquefaction, transportation, regasification, etc shoots up the price to $12-$14.
Unfortunately, domestic gas supplies are inadequate and do not meet the full requirement of the fertilizer industry, and even at the present price of $4.2 per mmBtu, the government has to subsidize the cost of urea for supplies to the farmers. The proposal to increase gas price to $8.40 will only mean a greater subsidy to this industry so that farmers do not suffer. At the same time, the government cannot afford to withdraw this subsidy and leave the pricing of urea to the manufacturers as elections are round the corner.
For more than a decade now, 13 years to be precise, there has been no urea plant that has come up in the country primarily due to the fuel supply situation.
So, in January this year, when the government invited proposals under the new investment policy, the response has been overwhelming in as much as 15 applications were received, which are all in this field, showing keen interest either to expand their existing units or to put up new units, probably at new locations.
The reason for this encouraging response is simple. The government underwrites the entire production of urea and the investors will be able to have a profitable return of 15%-20% on equity. Of course, there is no guarantee for supply of gas, which is set to go north by April next year. In any case, an average of 18-24 months is required to set up new plants and investors will have to come out with their innovative ideas for ensuring fuel supply. Expansion of existing plants may be much shorter, but still the fuel supply issue will have to be tackled.
The Department of Fertilizers has been mulling on this idea for some time now as it is fully aware that gas is in short supply and LNG prices are high. What are the options open for the government?
The first one is to investigate the question of capacity expansion at the Oman plant.
The second is to start serious talks with the Emirate of Qatar, which is the largest supplier of LNG to India. It would be prudent, economical and viable and positively cheaper to set up the urea plant in this emirate, and import the urea into the country.
The third is to persuade NRI businessmen residing in Dubai (United Arab Emirates) to set up a urea plant in places like the Jebel Ali Free Zone where it is not even mandatory to have a local partner or sponsor to set up industries.
At the moment, therefore, it is futile to think of putting up any new plant in India until gas supplies are sufficiently large enough to meet the existing demand of the units. Or else, the existing units come up with alternative fuel arrangements to ensure production and supplies.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
Last month's Supreme Court ruling on the Voting Rights Act was just the latest move in a 150-year dance between the high court and Congress over the protections owed this country's African Americans
Ever since the War of the States, Congress and the Supreme Court have clashed over the question of civil rights. Congress would move to guarantee certain rights for black Americans and the Supreme Court would turn around and limit those rights. At other times, the Supreme Court would expand these rights only to have Congress ignore them.
An instructive example: At the Civil War’s end, Congress passed the most sweeping civil rights legislation this nation has ever seen, and the Supreme Court swiftly moved to stifle the reach of those laws. Its rulings in the late 1800s – most notable in Plessy v. Ferguson -- would usher in nearly a century of Jim Crow.
Conversely, the path to civil rights reveals points where the Supreme Court has grown impatient with Congress’ unwillingness to protect the rights of black citizens. The best known example of this, of course, was the revolutionary Brown v. Board of Education decision that dealt the knockout blow to the doctrine of separate but equal treatment for black Americans. But it would take Congress more than a decade to actually force school desegregation.
Depending on your politics and the direction of the latest ruling at any given time, the court has been either radically activist in expanding civil rights or radically activist in stepping on the legislative branch to restrict these rights.
Last month, the Supreme Court struck down a key part of the landmark 1965 Voting Rights Act, and the outcry against an activist court rang anew. Many criticized the ruling as an extreme example of judicial overreach. They said the 5-4 decision that broke down along ideological lines trumped Congress’ expansive constitutional authority to enact legislation to enforce the amendments guaranteeing black Americans the right to vote and equal protection under the law.
But Lawrence Goldstone, author of “Inherently Unequal: The Betrayal of Equal Rights by The Supreme Court, 1865-1903,” said in an interview that every Supreme Court Justice is an activist. The makeup of the Court has always determined its stance on civil rights.
Those on the Court claiming to be strict constructionists, he said, are living out a fantasy.
“The language of the Constitution is intentionally vague; it is such that there is no one interpretation that is obvious and clear to everyone,” Goldstone said. “You’ve got a document and you’ve got nine people who are reading the document and saying this is what I think it means. No one person has a monopoly on understanding and interpreting the Constitution. And so then it becomes political.”
When considering last month's rulings on affirmative action, the Voting Rights Act and the Defense of Marriage Act, it is useful to take the long view of the push and pull between Congress and the Supreme Court when it comes to civil rights. The long arc of history might bend toward justice, but there’s always been a lot of pendulum swinging along the way.
The market regulator claims it does not have information on surveillance, inspection and prosecution. This is an unbelievable admission since it spends over Rs50 crore of taxpayers’ money
In response to Moneylife’s Right to Information (RTI) appeal, the Indian capital market watchdog, Securities Exchange Board of India (SEBI) has made a surprising admission: it does not have information pertaining to its surveillance, inspection and prosecution activities!
We had filed an RTI on how its state-of-the-art surveillance systems, the Integrated Market Surveillance System (IMSS) and Data Warehousing Business Intelligence System (DWBIS) fared by asking the following simple questions:
The PIO (public information officer) at SEBI, however, denied the information. The PIO on 7 May 2013, vide CPIO/AKS/AJ/325-2013/10853, stated “It is informed that the information sought by you is not available with the concerned department of SEBI.” The entire story can be accessed here.
We then filed our first appeal before the First Appellate Authority (FAA) at SEBI. In the appeal, we requested the FAA to direct the PIO to forward the RTI application to the concerned department that has the information. The FAA, however, rejected the first appeal.
Vide its order AAO/1691/RTI/07/2013, dated 5 July 2013, S Raman, the FAA stated: “I do not find any reason to disbelieve the response provided by the respondent (SEBI). In this context, I note that the Supreme Court of India in the matter of Central Board of Secondary Education & Anr Vs Aditya Bandopadhyay & Ors (Judgement dated 9 August 2011), had held that: ‘The RTI Act provides access to all information that is available and existing. But where the information sought is not a part of the record of a public authority, and where such information is not required to be maintained under any law or the rules of regulations of the public authority, the Act does not cast an obligation upon the public authority, to collect or collate such non-available information and then furnish it to an applicant.’ In view of these observations, I find that the respondent cannot be obliged to provide the information sought by the appellant through the instant query.”
It is pertinent to note that the data related to surveillance is clearly disclosed in SEBI’s annual reports. However, SEBI has published only the aggregate data but not the specific information which we had specifically asked for. The annual report does not mention how many cases were detected by the IMSS and DWBIS systems, respectively, for which it has spent so much taxpayers’ money. Why it has not disclosed this information remains a mystery.
SEBI has spent so much money on beefing up its surveillance mechanisms. It has 48 people on staff as of 31 March 2013, and has so far spent collectively over Rs50 crore of taxpayers’ money, on the state-of-the-art IMSS and DWBIS. It has also employed Tata Consultancy Services (TCS) to take care of its DWBIS. Yet, there are continued cases of brazen manipulation, which is covered in every issue of Moneylife, under the ‘Unquoted’ section. You can check our unquoted section online here. Moneylife even had an exclusive cover story on the same which can be accessed here.