(Weekly Organ of the Communist Party of India (Marxist)
February 19, 2012
AUGMENTING INDIGENOUS FERTILISER CAPACITY
Another Cock and Bull Story
IN September 2002, the then NDA government
decided to close down seven urea manufacturing plants, mostly in the
region of our country. These were the Barauni (Bihar), Haldia and
Subsequently the urea plant of NLC and
The justification of the decision was that fertiliser, especially Urea, is available in abundance in the international market at much lower prices. International fertiliser cartels are active; they offer urea at a cost lower than the indigenous production cost. The price of imported urea was said to be quite minimal --- only 80 dollars per tonne.
The production cost of a large number of public sector urea units with naphtha as feedstock is quite high in comparison to the gas based units set up along the HBJ (Hazira-Bijaypur-Jagadishpur) gas pipeline.
This was exactly the design of the international fertiliser cartels --- force the country to close down its own capacities by offering the product at throw-away prices, make the country import dependent and then dictate the market. This is exactly the situation today. Import of urea during 2010-11 was a hopping 8.7 million tonnes and that of DAP was 7.8 million tonnes. As per the annual report of 2010-11 of the Department of Fertilisers, urea price, which was US 280.75 dollars fob per MT in January 2007, went up to US 815 dollars fob per MT in January 2008. In a similar manner the DAP price went up from US 320.5 to US 802 dollars during the same period and was US 1331 dollars per tonne by May 2008.
On the other hand, urea production in the
country has hardly increased. In fact, there is no investment in the
since 1995. The capacity remains almost static at 20 million tonnes
consumption continues to increase at about 5 per cent per annum. Farmers in
It was in this compelling circumstance that it was reported that on August 4, 2011 the Cabinet Committee of Economic Affairs (CCEA) had given approval to the proposal of the government to renovate the now closed eight units of HFC and FCI. The proposal envisages revival of the Sindri unit (Jharkhand) through a consortium of SAIL and NFL, of Talcher plant (Orissa) through a consortium of GAIL, CIL and RCF, and of Ramagundam Plant (AP) through a consortium of EIL and NFL, and of the remaining five plants at Gorakhpur (UP), Korba (CG), Barauni (Bihar), Haldia (WB) and Durgapur (WB) through private investment. It has also been stated that other than the plants of Talcher and Ramagundam, all other plants would be revived with natural gas as feedstock.
The projected additional requirement of gas for fertiliser sector, as determined by the fertiliser ministry and communicated to the ministry of petroleum and natural gas for allocation, is as seen in the table alongside.
All the above proposals have been formulated with the assumption that the ministry of petroleum and natural gas would make arrangement to supply this additional quantity of gas by 2013-14. But what exactly is the situation on this front?
To bring the gas-starved eastern sector of our country onto the gas map, the demand of setting up a national grid has gained momentum.
It is reprehensible that the policy makers have continued to deprive the eastern sector for a pretty long period. The union government
has finally decided to extend the HBJ gas
pipeline from Jagadishpur in Uttar Pradesh to Haldia in West Bengal via
and Jharkhand on the one hand and to set up a new pipeline from
In a seminar organised by the FICCI on petro
products and natural gas at Kolkata on September 8, 2011, L Man Singh,
of the Petroleum and Natural Gas Regulatory Board faced a query
progress of setting up of the proposed gas transmission lines. He then
that the Reliance Gas Transmission Infrastructural Ltd, in charge of
of KG Basin gas, had said that they were not that eager to set up the
right now due to non-availability of sufficient gas. Similarly, the
intimated that the projected extension of HBJ pipeline had been
deferred due to
inadequate supply of gas. On October 23 last year, the GAIL officially
announced that it had deferred the commissioning deadline of several of
pipeline projects including that of Jagdishpur-Haldia pipeline
original schedule of commissioning was March 2012. As per GAIL, delay
commissioning of the LNG terminals at Dabhol and
Thus the availability of gas remains totally uncertain and hence there is uncertainty over the revival of the closed units. This only
means certainty of more and more imports at the ruling high prices, and thus the interest of the votaries of import remain well protected for the years to come.
So what? After all, there is no rationing in giving assurances!
While this is the actual position in the natural
gas front, the government remained evasive. In this regard, union
chemicals and fertilisers, M K Alagiri responded about two months
October 11, 2011, to the letter written to the prime minister on August
by Basudeb Acharia, leader of CPI(M) group in the Lok Sabha. The
“I would like to assure that my department is committed to revive the
units of HFCL including its Durgapur Unit.” But the minister did not
of the questions raised by Acharia. He did
not tell which magical band would make the requisite quantity of 69.45
standard cubic metres of gas per day available. He did not say a word
the setting up of the gas transmission line by GAIL and RGTIL will
when they would be ready for commissioning. He did not communicate why
was the proposal for revival of Sindri, Ramagundam and Talcher plants
consortium of PSUs and why all other closed plants were left open for
participation. Nor was there any answer to why the initial proposal of
to make synthesis gas available through coal gasification route in an
The import lobby is strong enough. The import of urea at the ruling high prices is now a compulsion and will therefore continue undisturbed, while ministers and bureaucrats would continue to feed us on assurances.
So what is finally going to happen? The Government is out to sell the entire properties of these closed factories to private parties on various hitherto unheard of methods --- like revenue sharing --- to manufacture some quantity of fertiliser at least. For this purpose, supply of natural gas at the factory battery limit is also being assured by the government. As already stated, availability of gas is yet another story and therefore the entrepreneurs would be free to utilise the land and infrastructure for other purposes including of course real estate businesses.
In sum, the successive governments have already made the country import dependent in regard to urea and now once again they are befooling the public in the name of sincere efforts to revive the closed urea capacities in the country through a handover of the much valued properties to the business houses of their choice. The country is already facing an acute shortage of fertilisers; farmers are confronting heavy price rises in case of all ingredients like seeds, fertilisers, insecticides etc. Availability of all the ingredients in time, which was hithertofore ensured by the government, has now been left to the so-called market forces.
In the meantime, the government has almost done away with the public distribution system. Farmers are not getting remunerative prices for their produce and are gradually losing interest in cultivation. Farmer suicides all over the country has already become a matter of serious concern.
However, even at this hour of a serious crisis in the agriculture sector which is affecting the food security of the country, the union government has started playing yet another game over the indigenous availability of a fertiliser. There is no end to the miseries of the people, but the ongoing fertiliser policies of the government are factually pushing the country to a much difficult situation. The situation demands a united movement of the workers and peasants against the policies of the government.