Fertiliser industry is in wait and watch stance for several policy changes

India’s one of the leadings players – chemicals and fertiliser sector, ought to endeavor amid top five chemicals and petrochemical industries and most of the fertiliser manufactures have taken a stance of wait-and-watch to explore more options to boost investments. In last few decades, in fertiliser industry very less of investments have taken place due to one after the crisis. According to the sources, natural gas which is a preferred raw material for urea manufacturing has significantly showed rise in the prices.

Moreover, natural gas is one of the most efficient and cleaner fuel & raw material when it comes to the production of ammonia, however with the inadequate availability of gas few urea producers were forced to use alternate liquid feedstock to keep their plants running at curtailed rates, whereas few manufactures have vigorously shutdown their plants. According to the sources, on 1st July, 2014 the oil ministry had passed a note to the cabinet demanding a fresh formula for gas price and will likely fragment the formula of Rangarajan for decisive domestic natural gas price.

According to the industry experts, the pricing formula that pushed the gas prices higher as suggested by the Rangarajan panel will be juggled around on certain elements by the government. Furthermore, the domestic prices through most calculations are expected to be double in near future from around USD 4.2/mBtu to around USD 8/mBtu from July, 2014.

Moreover, as per the sources to revive fertilizer plants several Indian public-sector companies are getting together that are also undertakings. Major fertiliser manufacturers of India Rashtriya Chemicals & Fertilizers Ltd., GAIL India and Coal India Ltd., will revive the Talcher unit of Fertilizer Corp of India by investing USD 1.3 billion with an aim of producing

1.2 million tons/annum of ammonium nitrate and urea. Furthermore according to the researched report, Rashtriya Chemicals & Fertilizers Ltd. which is noted as one of the leading producers of fertilizers in India will aim to double its turnover in the next five years.

However, Ananth Kumar the Union Minister for Chemicals, Petrochemicals and Fertilisers on 4th July, 2014 had announced that at present there are no such plans to boost the prices of urea or cut the subsidies and the market of urea is currently tamed and valued at the cost of Rs. 5,360 a ton. In addition to it Ananth Kumar has pointed out that his ministry had sought good reason of more incentives and taxes in the imminent Budget for the fertilisers, petrochemicals and chemicals sector.

As per the sources, China is one the first country to use coal based ammonia production which is probably one of the aggressive methods, however the country has also produced methanol for olefins by using coal as a primary hydrocarbon resource. 

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