India likely to import 4.75m tonnes additional urea in fiscal ’13-14

27 August 2013 09:44  [Source: ICIS news]

KOLKATA (ICIS)--India will have to import an additional 4.75m tonne of urea in the current fiscal year over its imports in 2012-2013 owing to uncertainties over natural gas allocation by the government, an official in Ministry for Chemicals and Fertilizers said on Tuesday.

India imported 6.4m tonnes last year and official estimates put the current years’ imports at 11.15m tonnes because of lower gas allocations expected to the urea makers amid conflicting claims of natural gas requirements from power and fertilizer sectors.

The government is planning to do away with priority allocation of natural gas to for the fertilizer production over demands from other sectors, which will result in feedstock shortage for existing gas-based fertilizer plants, the official added.

The government will also delay the planned and ongoing conversion of naphtha-based fertilizer plants to natural gas, the official added citing a note circulated by the Ministry of Fertilizer to the Empowered Group of Ministers (EG0M), currently working on gas allocation policy.

According to estimates drawn up by the ministry, the additional imports of 4.75m tonnes of urea will entail a bill of around $1.66bn (€1.25bn) based on the current landed price of urea at $350/tonne including port and handling costs, the official said.

In contrast  local cost of urea based on domestic natural gas availability in dollar terms was estimated at $215/tonne, the official said adding that total import bill could bloat further given the rapidly deprecating rupee putting further pressures on the country’s current account deficit the government was grappling with at present.

($1 = €0.75)

Author: Ajoy K Das

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