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Govt to revive 3 closed fertiliser plants to ensure self-sufficiency

 PTI |  2016-07-14 00:23:47.0  |  New Delhi

Govt to revive 3 closed fertiliser plants to ensure self-sufficiency

The Government on Wednesday approved the revival of three closed fertiliser plants at Gorakhpur, Sindri and Barauni at an estimated cost of Rs 18,000 crore as part of its efforts to meet demand of eastern states and make India self-sufficient in urea output. The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the revival of three defunct fertiliser units with a capacity of 1.27 million tonnes per annum each.

Fertiliser Corporation India Ltd (FCIL) has two closed urea plants at Sindri (Jharkhand) and Gorakhpur (Uttar Pradesh), while Hindustan Fertilisers Corporation Ltd (HFCL) has one closed factory at Barauni (Bihar). “These three fertilisers units would be revived by means of Special Purpose Vehicle (SPV) of Public Sector Units (PSUs) namely, National Thermal Power Corporation (NTPC), Coal India Ltd (CIL), Indian Oil Corporation Ltd (IOCL) and FCIL/ HFCL, through ‘nomination route’,” an official statement said.

“Today’s decision is a game changer in economy of eastern India,” Law and IT Minister Ravi Shankar Prasad told reporters here on Wednesday. Earlier in 2015, the government had approved revival of these three units through ‘bidding route’.

However, the bidding process could not be carried forward due to receipt of only one application each against ‘Request for Qualifications’ (RFQs) for revival of Gorakhpur and Sindri units of FCIL, the statement said.

In April this year, Prime Minister’s Office (PMO) had held a meeting to chalk out the revival plan of these plants. Cash- rich public sector firms ONGC, NTPC and Coal India were asked to adopt one shut urea plant for revival which would cost about Rs 18,000 crore over the next four years.

The government said that the setting-up of new units at Sindri, Gorakhpur and Barauni would help in meeting the growing demand of urea of Bihar, West Bengal and Jharkhand. The revival of these plants would ease the pressure on rail-road infrastructure due to long distance transportation of urea from western and central regions and thereby saving in government subsidy on freight.

Moreover, this would accelerate the economic development of the eastern region and create opportunities for 1,200 direct and 4,500 indirect employments. “GAIL has planned to lay a gas pipeline from Jagdishpur to Haldia. These units will serve as anchor customer for this pipeline and ensure its viability,” Prasad said.

The government had approved gas pooling for urea sector which will enable these units to get gas at pooled price making them globally competitive. Stating that these units were lying defunct since their closure during 1990-2002, the government said that there is no functional urea unit in the eastern part of the country except two small units at Namrup (Assam).

India’s annual demand of urea is about 32 million tonnes, out of which 24.5 million tonnes is produced indigenously and the rest is imported. To enhance the domestic urea output, the government had earlier approved the revival of Talcher (Odisha) and Ramagundam (Telangana) units of FCIL by PSUs through ‘nomination route’.

Urea is a controlled fertiliser and its selling price is fixed at Rs 5,360 per tonne. Government pays the difference between cost of production and selling price as subsidy to the manufacturers.

… To import 2 mt urea by end of month to meet kharif demand
 To meet the demand of fertiliser in the ongoing kharif season, the government has contracted 2 million tonnes of urea import for delivery by the end of this month. India is dependent on urea imports as domestic output is lower than the demand. Overseas purchase is being done via three state trading enterprises - STC, MMTC and IPL.

“Our urea requirement is 2.5 million tonnes for this kharif season. We have finalised imports for 2 million tonnes of urea which will reach Indian ports by the end of this month,” said a senior Fertiliser Ministry official. The third import tender has been floated to procure the balance 5,00,000 tonnes of urea, the official said. 

Till last week, farmers had sown kharif crops like paddy and pulses in 40.6 million hectare. Though the acreage was down compared to the year-ago period, good rains in most parts have boosted planting operations. Once the kharif season is over, the government will assess the urea requirement for the rabi (winter) season after discussing with the states and then place tenders for imports. Normally, urea requirement is around 3.5 million tonnes for the rabi season beginning October. 

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