Indian nod for four urea plans

19 April 1999 00:00  [Source: ACN]

The Indian government has approved four urea projects proposed by the public and co-operative sectors pending a decision on the revised fertiliser pricing-cum-subsidy policy.

The projects are: Krishak Bharati Co-operative's (Kribhco) expansion project at Hazira in Gujarat and a brownfield project at Gorakhpur in Uttar Pradesh, Rashtriya Chemicals & Fertilisers' (RCF's) expansion project at Thal in Maharashtra, and Indian Farmers Fertiliser Co-operative's (Iffco) greenfield project at Nellore in Andhra Pradesh.

Each project has the capacity to produce 768 000 tonne/year of urea. The projects will meet the anticipated growth in demand for urea by 2002-03.

The Cabinet Committee on Economic Affairs (CCEA) did not approve National Fertilisers Ltd's (NFL) expansion project at Panipat in Haryana. Instead, the Nellore project was approved even though it was at the bottom of the priority list. CCEA had to pick three out of the five projects in the list.

The priority list was prepared on the basis of a one-time savings in capital costs, annual savings in freight charges for raw materials and urea and annual savings due to the change-over from naphtha to imported liquefied natural gas (LNG) as feedstock. These will ultimately result in smaller subsidy payments from the Indian government.

Industry sources said the approval of the Nellore project has resulted from pressure from Telgu Desam, a major regional party supporting the coalition government. They said Andhra chief minister Chandrababu Naidu recently met Prime Minister AB Vajpayee to demand a go-ahead for the Nellore project.

The government's support for certain projects while others have been put on hold has already caused some resentment in the fertiliser industry (ACN 8 Feb, p26).

The prioritisation of public and co-operative sector projects and the subsequent approval of the four projects has left the private sector little room to expand.

The fertiliser price-cum-subsidy policy is now under review. The Committee on Fertilisers Pricing Policy has made recommendations and is seeking the views of the industry. The review will be completed once the talks have concluded.

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