Several fertilizer units have stopped production due to inadequate gas supply from the domestic market. This resulted in India importing over 15 lakh tonnes of fertilizers at higher prices. In such a scenario, setting up of an integrated Coal Gasification-cum-fertilizer and ammonium nitrate complex at Talcher in Odisha is a good news
It may be recalled that effective from October, three urea units in the south, viz, Madras Fertilizers, Southern Petrochemicals Corp (SPIC) and Mangalore Fertilizers and Chemicals, which were using naphtha as a feeder stock, stopped production, as their subsidy was withdrawn. Now further news reveals that, in the case of Deepak Fertilizers, a non-urea maker who was dependent upon gas, also was cut off from supplies since May, by the previous government. There is fear that two other units, Rashtriya Chemicals & Fertilizers (RCF) and Gujarat State Fertilizers may also meet the same fate, if the gas supplies are stopped. All these have resulted in the importation of more than 15 lakh tonnes of fertilizers at the high current level of prices from the international market.
All these could have been avoided, if there was some serious thought to the repercussions that government actions can cause, regardless of whether these were made by the previous or present government. A section of the fertilizer industry has taken up the issue with the Prime Minister, urging him to treat the industry in a fair and equitable manner, seeking relief, under the "Make in India" scheme to ensure that the country becomes self-reliant!
Under the circumstances, in more ways than one, the fertilizer industry got a boost by the announcement of a Joint Venture pact signed by Coal India, GAIL, RCF and the Fertilizer Corporation of India, to set up an integrated Coal Gasification-cum-fertilizer and ammonium nitrate complex at Talcher in Odisha, by 2019.
This was announced recently by Ananth Kumar (Minister of Chemicals and Fertilizers), Dharmendra Pradhan (Minister of State for Petroleum and Natural Gas) and Piyush Goyal, (Minister of State for Power, Coal and New & Renewable Energy). The total cost of the project is estimated at Rs9,000 crore.
Press reports indicate that the upstream venture costing Rs3,000 crores, is to be called GAIL Coal Gas India Ltd and GAIL will hold 35% stake in the same. Fertilizer Corporation of India Ltd will hold 11%m, RCF and Coal India will hold 3% stake each, while the balance of 48% will be given to the technology provider and financial institutions. The name of the technology provider has not yet been announced. In due course, it is possible, that some stake may be sold to retail investors.
It has been mentioned that the upstream project is for converting coal into synthetic gas and the downstream plant proposes to manufacture urea and other fertilizers. The downstream venture, to be called Talcher Chemicals and Fertilzers Ltd will be headed by RCF and Coal India, each of whom will hold a 40% stake, while GAIL and FCIL will take the balance of 10% each. This plant is expected to manufacture 1.3 million tonnes of urea and other fertilizers, details of which are not stated at the moment.
In order to avoid stumbling blocks, two coal blocks have been earmarked for this project; one has been allocated and the other is a standby and kept as reserve. The development work to mine coal in this allocated block must start as soon as possible, so that when the plant is ready, the mine if fully operational.
It is of interest to note that the domestically produced conventional gas is priced at $5.61 per mBtu, while the projected price of gas made from coal will be around $6.5 per mBtu.
Ananth Kumar said that plans are on the anvil to revive the units at Gorakhpur, Barauni, Sindri and Ramagundam. It is would be worthwhile to investigate if one of these sites is selected so that a simultaneous efforts is made to study and set up a similar project, to avoid loss of time. We need the fertilizers, coal is available in abundance and finance can be generated to set up such plants.
In the meantime, for the three plants in the south which were dependent upon naphtha as a feed stock, the Ministry must either direct the suppliers to make these available at export parity price and assure them the subsidy to avoid any further import of urea from the international market.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also 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.)
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