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Notification of subsidy on NPK and withdrawal of NPK allocation order: Why is there a delay?. Ammonia through coal gasification route-I: Sriram EPC intensifies effort, wants to tie up with MFL. Ammonia through coal gasification route-II: Pooling of gas price makes project viable on imported coal. Ammonia through coal gasification route-III: Business opportunities available. DOF deregisters 31 P&K importers. Gas pooling comes under fire-I: CARE says keep domestic gas separate from LNG. Gas pooling system comes under fire-II: Other LNG suppliers miffed at GAIL's monopolization of fertilizer market . Crop damage caused by unseasonal rainfall: Agricultural output expected to stagnate on a year-on-year basis, feels ICRA. Gas-based urea capacity to increase from 24 MMTPA at present to 32 MMTPA by 2016-17, believes EIL. Indian Potash to import 1.35 million tons of fertilizers from PhosAgro by 2018. News Briefs. DOF issues notification to clear air on applicability of NBS rates on year-end stock of P&K fertilizers. Matix to conduct trial runs from September-I: Domestic price will be applied on gas to be supplied from Raniganj field. Matix to conduct trial runs from September-II: Series of RFQs likely going ahead. MCFL bailed out by Delhi High Court but bottomline hit: Will an adversarial position with government hurt business?. No increase in price of urea for next four years: Is it good or bad news?. GAIL appropriates space for itself in fertilizer industry: Download presentation . Environment ministry nod for Rs 150 crore de-bottlenecking project at Tata's Babrala plant.

Notification of subsidy on NPK and withdrawal of NPK allocation order: Why is there a delay?

June 3: The fertilizer industry seems to be miffed by the fact that no subsidy rates have been announced so far for individual nutrients for complex nitrogen, phosphatic, potassic and sulphur based fertilizers.
 8Ordinarily these rates are announced in March before the onset of the next financial year, leaving suppliers and manufacturers to arrive at their own plans with certainty.
 8But this time around the uncertainity continues to prevail and despite the fact the cabinet has already taken a decision, the notification has not come out yet.
 8As of now the situation is such that there is a void, and theoretically, there are no subsidies available.
 8Nevertheless, manufacturers are continuing their supply of fertilizers, marking last year's subsidy rates on bags. By law this is not legal.
 8Then again, decisions have also been taken to withdraw the allocation control for NPK fertilizers but here again, the DOF seems to be taking its time in coming out with the notification.
 Comment: When the  industry faces a genuine problem, and decisions have been taken at the highest level, there is no reason why there should be a delay in bringing out the notifications. This is an act of bureaucratic procrastination that the Prime Minister will not be happy about if he gets to know about it.
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Ammonia through coal gasification route-I: Sriram EPC intensifies effort, wants to tie up with MFL

June 3: There is no other company in this country trying as hard as the Chennai-based Sriram EPC to set up a coal gasification plant to make ammonia.
 8The company has been doggedly pursuing the project despite many hurdles and it has now come to a stage where it thinks that the wait and the effort was worth it after all.
 8The company is now trying hard to tie-up with Madras Fertilizers Ltd (MFL) so that the 900 TPD ammonia that it will produce through the gasification route can be used to feed the sub-optimal 1475 TPD urea plant at the public sector company's Manali complex.
 8Sriram has asked for 120 acres out of the total area of 300 acres to set up the the ammonia plant in Manali. The company had earlier tried to construct the unit in Paradeep but ran into land acquisition trouble.
 8Just last week, the company had made a presentation to the MFL Board and there is a general acceptance of the idea, and now meetings are likely in Delhi in the weeks ahead.
 8MFL however will also have to look at the option of going through the gas route to produce urea as they have already spent Rs 300 crore in modifying their ammonia plant.
 8So, in case, Sriram does get to set up an ammonia plant, the extra ammonia plant that MFL will have will have to be run on gas along with a parallel brownfield urea plant.
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Ammonia through coal gasification route-II: Pooling of gas price makes project viable on imported coal

June 3: The pooling of gas prices has made coal gasification an attractive proposition as the cost of manufacturing will possibly be cheaper than using gas
 8Sriram in fact is not averse to the idea of using more costly Indonesian coal if domestic coal allocation is a problem even though it is making a valiant attempt for allocation of a domestic quota.

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The current effort is to put in an application jointly with MFL for coal allocation with the backing of the DOF and perhaps the PMO, as everyone seems to be keen to get a commercial coal gasification project going.
 8The capex of a coal fired ammonia plant is higher by about 30 to 40% in comparison to a gas based plant, according to Srirram.
 8In this case the feedstock is far cheaper at $2.5/mmbtu in comparison to $10 or more for pooled prices.
 8There is some tradeoff though. Gas based ammonia plants come at 8 giga cals per tonne or less in relation to 11 giga cals through the gasification route.
 8But at the balance, it is cheaper to use coal than power.
 8What comes out clearly from the Sriram experience is that coal gasification can work if gas prices are pooled even on imported coal though domestic coal allocation can be a bonanza. The problem is that the government has to be more proactive. Land acquisition, as Sriram has faced, is a big problem, particularly as a plant has to be located near a port  for supply of imported coal should the need arise.
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Ammonia through coal gasification route-III: Business opportunities available

June 3: Sriram seems very serious in pursuing the coal gasification route and there are business opportunities here for suppliers of equipment.
 8It has already obtained a gasifier from Germany using the British Gas-Lurgi process. So two more gasifiers will come in from the same source.
 8The ammonia plant is being relocated from Portugal and the revamping of the plant will be done by Casale of Switzerland.
 8But there is a need for a EPCM or a PMC in next few months if everything goes well.
 8Orders will have to be placed for gas cooling, gas to liquid and phenol separation plants. These orders will have to be placed.
 8Orders for long lead items can come sooner than later.  RFQs are going to be out for these as well.
 8The total project cost is Rs 2000 crore.
 Please click on Details to obtain information on key contacts that a supplier of equipment and services will find very useful. You business opportunity is just a phone call away.
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DOF deregisters 31 P&K importers

June 2: The DOF has decided to deregister as many as 31 importers of P&K from the NBS scheme for not complying with its March 31, 2015 policy guidelines
 
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These companies will now have to seek permission again if they wanted to import subsidiised P&K fertilizers.
 Among the major companies whose licenses have been cancelled were:
 
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Indo Gulf
 
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GNFC
 
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NFL
 
8MMTC
 Click on Reports for more

Gas pooling comes under fire-I: CARE says keep domestic gas separate from LNG

June 2: :In a rather poorly drafted critique of the gas pooling mechanism that the government  has put in place for the urea industry, CARE has said that it does not make sense to pool domestic and LNG prices for the entire industry as the cost of production would then be higher than the cost of imported urea.
 8Instead, the suggestion is that domestic gas should be allocated on a pro-rata basis to all companies and the balance manufacturing capacity should be a a mix of manufacturing through RLNG and/or import of urea. In this context, units should be given the option to import urea if the cost is lower. There can be significant subsidy savings if this methodology is adopted.
 CARE has suggested other ways of reducing the subsidy bill, including:
 8Mobilizing coal gasfiication technology in India as is done in China where manufacturing cost if cheap
 8Set up JVs in countries where the cost of gas is cheap. Then it will cheaper bringing in that urea rather than making it here with LNG.
 8CARE also claims that attempts have to be made to ensure that subsidy bills are dispensed on time. DOF has now made a claim for Rs.32,677 crore in additional budgetary allocation over and above Rs.77,070 crore in FY15 to clear subsidy arrears but the money was only paid from allocations made in FY16. Now that it is confirmed that the price of urea will not be raised, ballooning subsidy bills will impact the finance ministry's attempts to trim the fiscal deficit.
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Gas pooling system comes under fire-II: Other LNG suppliers miffed at GAIL's monopolization of fertilizer market

June 2: GAIL`s complete monopoly in running the gas pooling system has invited the ire of other LNG suppliers in India, such as GSPC LNG Ltd, IPC, BPCL, Shell and others.
 
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GSPC for example supplied as much as 3 mmscmd of LNG out of a total of 10 MMSCMD that it sold in the domestic market.
 
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Now however, GAIL will take over and supply an equivalent quantity of gas to the fertilizer industry.
 
8The other LNG suppliers are equally miffed at the prospect of leaving out the fertilizer sector from their ambit as GAIL would have monopoly rights.
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Crop damage caused by unseasonal rainfall: Agricultural output expected to stagnate on a year-on-year basis, feels ICRA

June 1: The rating agency ICRA is of the view that the agricultural output this fiscal is expected to stagnate on a year-on-year (y-o-y) basis on account of crop damage caused by unseasonal rainfall, among other factors.
8However, despite the headwinds posed by muted global growth and an unfavourable monsoon outlook, the rating agency ICRA expects the Indian economic growth to improve to 7.6-7.8% in 2015-16 from 7.3% in 2014-15.
8Although harsher-than-expected monsoon dynamics and muted export growth pose risks to the India`s growth story, ICRA expects it to outpace the expansion recorded by most countries with a comparable size in the current fiscal.
8Going forward, higher government spending on infrastructure, simplification of clearances, easing of norms for foreign direct investment, continued reform momentum and monetary easing are expected to support a revival in investment activity in FY 2015-16, ICRA believes.
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Gas-based urea capacity to increase from 24 MMTPA at present to 32 MMTPA by 2016-17, believes EIL

June 1: The gas-based urea capacity will increase from 24 MMTPA at present to 32 MMTPA by 2016-17, believes Engineers India Ltd (EIL).
8The company, which provides engineering services to fertilizer companies, among others, is laying emphasis on conversion of present naphtha/fuel and oil based plants to use of natural gas as feed stock as also on greenfield urea plants.
8In a recent presentation, made to investors, the company said that as much a a quarter of its total orders (both consultancy and LSTK) has come from the chemicals and fertilizer sector in 2014-15.
8Talking of only of consulting orders, the share of chemicals and fertilizer segment is estimated at 31% in 2014-15.
8It is pertinent to note that EIL recently picked up 26% stake in the Rs 4,500 crore Ramagundam fertilizer project where it will also work as the EPCM consultant.
Click here to access the presentation
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Indian Potash to import 1.35 million tons of fertilizers from PhosAgro by 2018

June 1: Indian Potash Ltd has signed an MOU with the Russian PhosAgro for the supply of 1.35 million tonnes of NPK, NPS and DAP fertilizers to India between 2015 and 2018.
8PhosAgro is quite excited about the agreement. The company expects that this year India will increase its imports to between 5.5 million and 6 million tonnes, compared to very weak purchases in 2014 of just around 3.5 million tonnes.
8Since the beginning of the year India has already purchased 2.2 million tonnes of Diammonium phosphate (DAP) in the first half of the year which is 900 000 tons more than in 2014.
8Over the last two years, PhosAgro has exported practically no fertilizer to India on the background of weak demand. At the beginning of the year, the company concluded a contract for 500,000 tons in addition to a three year agreement.
8The Indian fertilizer market at present is showing a stable demand for NPK/DAP fertilizers, believes PhosAgro. Indian DAP imports have improved dramatically already in 1H 2015 compared to 1H 2014, and current market expectations are that the country will take another 3 million tonnes by the end of the year.
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News Briefs

June 1:  8Sanjay Gupta replaces Purwaha as CMD, EIL: A. K. Purwaha has ceased to be the Chairman & Managing Director (CMD) of  Engineers India Ltd (EIL) with effect from today (June 1, 2015) on attaining the age of superannuation on May 31, 2015.
--In his place, Sanjay Gupta, Director (Commercial), EIL, has been appointed as the CMD of the company with effect from June 1, 2015.
--An engineering graduate from IIT Roorkee, Gupta has about 34 years of experience in the company ranging from planning to implementation of mega grassroots projects in the refineries and petrochemical sector.

 8Fertilizer production down by 0.04 % in April 2015: Fertilizer production -- which has weightage of 1.25% in the Index of Industrial Production (IIP) -- declined by 0.04 % in April 2015.
 --In March 2015, the production had increased by 5.2%.
 --Its cumulative index during 2014-15 declined by 0.1% over 2013-14.
8Changes in the management of Punjab Chemicals & Crop Protection Ltd: Punjab Chemicals & Crop Protection Ltd has informed the BSE about the following decisions taken by the Board of Directors of the company:
 --G. Narayana has stepped down from the position of the Chairman and also as the Director of the Company. Recognizing his invaluable and continuous contribution, the Board of Directors has designated him as the "Chairman Emeritus" of the company.
 --Mukesh Dayabhai Patel, Independent Director and Vice Chairman of the company, has been elevated as the Chairman of the company.
 --Nomination of Sheo Prasad Singh, Additional Director, as the Independent Director of the company will be placed before the Members in the ensuing Annual General Meeting (AGM).
 --S. S. Tiwari, Whole Time Director (WTD), has resigned from his position. The Board of Directors has now appointed him as an Additional Director of the company.
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DOF issues notification to clear air on applicability of NBS rates on year-end stock of P&K fertilizers

June 1: As the present NBS policy is silent on the applicability of Nutrient Based Subsidy (NBS) subsidy rates on the year end closing stock of finished fertilizers, the DOF has issued a notification to deal with the closing stocks of fertilizers for the purpose of subsidy.
8As per the notification, in case of an increase in the rates of subsidy, stocks of all the finished fertilizers held by the company as well as finished fertilizers in transit but not received at the district headquarters as on the day preceding the effective date of the applicability of the revised rates of the subsidy shall be treated as closing stock at the end of previous year and shall be eligible for the subsidy rates of the previous year.
8Conversely, whenever there will be a reduction in the rate of subsidy, the closing stock of a particular grade of fertilizer (on the date from which the revised rates become effective) will be eligible for the revised rate of subsidy.
8It is pertinent to note that he Nutrient Based Subsidy (NBS) Policy for decontrolled P&K fertilizers has been under implementation  with effect from April 1, 2010.  Under the policy, a fixed amount of subsidy decided on an annual basis is announced on each grade of these fertilizers based on their nutrient content. The MRPs of these fertilizers are fixed by the fertilizer companies at reasonable level.
8The new subsidy rates announced by the government are normally made applicable from the first day of the following financial year. The subsidy is paid based on the date of receipt/sale of fertilizers in the District HQ/dealer or retailers. The subsidy rates which are decided and announced by the government vary and can either be more or less compared to the previous year's subsidy.
8As it was felt that at the time of announcement of new subsidy rates, the companies could hold some stocks of finished fertilizers, a clarification was required to deal with the issue.
Click here for the notification
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May 29: Matix to conduct trial runs from September-I: Domestic price will be applied on gas to be supplied from Raniganj field   Details
May 29: Matix to conduct trial runs from September-II: Series of RFQs likely going ahead   Details
May 29: MCFL bailed out by Delhi High Court but bottomline hit: Will an adversarial position with government hurt business?   Details
May 29: No increase in price of urea for next four years: Is it good or bad news?   Details
May 29: GAIL appropriates space for itself in fertilizer industry: Download presentation   Details
May 28: Environment ministry nod for Rs 150 crore de-bottlenecking project at Tata's Babrala plant   Details
 
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