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The cost-economics of gas production in India: An analysis. Modi promotes a scheme for integration of agricultural inputs and an e-commerce platform. SSP units coming up; Details. Zuari's NPK plans: Environment ministry tells company to seek fresh TOR. GNFC: Project details. Briefs. Notional freight for DAP & NPK: Put in cold storage . Tata assets on sale-II: Adani rejects deal but others will line up . Talcher plant: Award of gasification contract put on hold. Tata assets on sale-I: Valuation will be much lower than the asking price. Alarm bells begin to ring on drying subsidy payments-II: Last year was a bad year, this year can be worse. Alarm bells begin to ring on drying subsidy payments-I: Money for urea will get over in July. As India wraps up purchases, urea prices are set to fall. Letter to the editor: Kolkata reader has his own direct transfer model. Panki fertilizer plant: Energy efficiency cum expansion plan on cards. Assam: 10 year fertilizer demand projection. New policy for decontrolled fertilisers-III: Nothing new in waiver of state certification. New policy for decontrolled fertilisers-II: Some clarifications not given.

The cost-economics of gas production in India: An analysis

July 2: The RIL-BP combine had at one point last year promised to get its gas output up to 50 mmscmd in the next 4 to 5 years from its current level of around 10 to 11 mmscmd of gas. This kind of output could have incubated many ammonia-urea projects in India, all based on domestic gas.
 
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But for that to happen, the deepwater discoveries in the combine`s D-6 and NEC- 25 blocks will have to go on stream.
 
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The condition however was that the discoveries can only be brought on stream if the price of gas is $10/mmbtu or more.
 
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The group had claimed that there is still a massive quantity of gas -- between 5 to 7 TCF -- in the deepwater and ultra deepwaters of its E&P blocks.
 
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The first of the projects lined up was the D-34 cluster of discoveries, which contains 1.2 TCF of gas, and first gas was expected by 2018. This development would have entailed an investment of $ 4 billion.
 
8The current price of gas is only half this level and therefore the combine has put its development plans on hold, as was announced by Niko, a 10% partner with the RIL-BP duo in the D-6 field, in a recent statement.

 
8What holds true for RIL and BP also applies for other players in the field such as ONGC and GSPC
 
8Clearly, this has implications for the fertilizer sector, for if the extra domestic gas does not get pumped in over the next few years, the dependency on LNG will go up, thereby skewing the cost economics of urea with respect to imported urea.
 Click on Details for a comprehensive analysis of the cost economics of gas production in India.
  Details

Modi promotes a scheme for integration of agricultural inputs and an e-commerce platform

July 2: The Modi government has today taken some decisions that have implications for the agricultural sector, and eventually have an impact on the fertilizer industry as well. The results are likely to show only towards the end of the government`s tenure, and if successful the Prime Minister can get electoral mileage from it.
8The CCEA has approved what is being termed as the "Pradhan Mantri Krishi Sinchayee Yojana" (PMKSY) with an outlay of Rs. 50,000 crore over a period of five years (2015-16 to 2019-20). The allocation for the current financial year is Rs. 5300 crore.
8The idea is to achieve convergence of investments in irrigation at the field level, expand cultivable area under assured irrigation (Har Khet ko pani), improve on-farm water use efficiency to reduce wastage of water, enhance the adoption of precision-irrigation and other water saving technologies (More crop per drop), enhance recharge of aquifers and introduce sustainable water conservation practices by exploring the feasibility of reusing treated municipal based water for peri-urban agriculture and attract greater private investment in precision irrigation system.
Creation of a all India e-platform for agricultural products
8Another laudable scheme that was introduced was to create a National Agricultural Market through an Agri-Tech Infrastructure Fund (ATIF).   The Department of Agriculture & Cooperation (DAC) will set it up through the Small Farmers Agribusiness Consortium (SFAC) a common electronic platform deployable in selected regulated markets across the country.   
8An amount of Rs. 200 crore has been earmarked for the scheme from 2015-16 to 2017-18.   This  includes provision for supplying software free of cost by DAC to the States and Union Territories (UTs) and for cost of related hardware/infrastructure to be subsidized by the Government of India up to Rs. 30 lakh per Mandi (other than for private mandis).
8The SFAC will implement the national e-platform in three phases during 2015-16, 2016-17 and 2017-18.  DAC will meet expenses on software and its customisation for the States and provide it free of cost to the States and UTs.  DAC will also give grant as one time fixed cost subject to the ceiling of Rs.30 lakh per Mandi  for related equipment / infrastructure in the 585 regulated mandis, for installation of the e-market platform.    Big private mandis will also be allowed access to the e-platform for purposes of price discovery.   However they will not be supported with any funds for equipment / infrastructure.
8But the platform will be implemented only in those states wwhich will undertake prior reforms in respect of (i) a single license to be valid across the state, (ii) single point levy of market fee and (iii) provision for electronic auction as a mode for price discovery. Only those States/UTs that have completed these three pre-requisites will be eligible for assistance under the scheme.
Neem coated fertilizers
8The government has also now made it mandatory for urea units to produce 100% production of their production in the neem coated format. Nutrient use efficiency of neem coated urea is about 5-10% higher than that of plain urea and, therefore, its use will economize the quantity of urea required by crops. Besides, coating of neem oil will also reduce the leaching of nitrates into the ground water and thus, help in reducing its
pollution
, a government press release said today.
Click on Reports for more
  Details

SSP units coming up; Details

July 2: Dhanlaxmi Bio-chem Pvt. Ltd is planning to set up a greenfield SSP and GSSP unit with a capacity 650 TPD each at Ahmedabad Gujarat .The projected cost is 25 crore .
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The
Power requirement for the project is about 1.4 MW, which will be sourced from Uttar Gujarat Vij Corporation Limited (UGVCL).
8A 200 KVA DG set will be provided on site for power backup, Rock Phosphate of + 4 mm to + 15 mm size will be sourced either from Rajasthan or from other sources like Jordan, Egypt, Morocco, Togo, Syria. The sulphuric acid will be brought in from outside.
8Project proponent has already obtained an NOC rfrom GSPCB for GSSP. Currently the company is awaiting clearance only for SSP from SEAC/SEIAA Gujarat.
BEC Fertilizers Ltd
proposes to expand the capacity of its Pulgaon SSP unit in Maharasthra  by raising its sulphuric acid capacity from 110 TPD to 170 TPD and SSP from 220 TPD to 500 TPD.
8The company also plans to raise its granulated NPK fertilizer capacity from 200 TPD to 670 TPD.
8The projected cost is  Rs 10 crore. The existing power requirement of the complex will go up from 0.7 MW to 3.2 MW and will be sourced from the Maharastra State Electricity Board.
Zuari.
  Details

Zuari's NPK plans: Environment ministry tells company to seek fresh TOR

July 2: The environment ministry has sought a fresh Terms of Reference for Zuari Agro Chemicals Ltd's (ZACL) proposed 30 TPH Fertilizer Blending Unit for Customized NPK Production, along with a 25 MW power plant on the ground that company had carried out a second amendment in the project configuration, requiring a fresh TOR.
The TOR was initially granted for a lower capacity and now that a higher capacity plant is sought to be set up, the environment ministry has said that this cannot be done by amending the TOR but by a fresh TOR.
The following facilities are being sought to be built by SZuari
--(37 Kg/Cm2g) Gas Turbine (GT)
--Unfired capacity of 50 MT/Hr. (70 MT/Hr. with supplementary firing) Heat Recovery Steam Generator (HRSG) .
--1X5000 MT Atmospheric Ammonia Storage Tank .
--Urea Granulation Plant (expansion of Urea production from 1500 MTPD to 1800 MTPD.
--Urea Prilling: 1200 MTPD+ Urea Granulation Unit: 600 MTPD).
  Details

GNFC: Project details

July 2: GNFC has got a long list of fertilizer projects that are either under implementation or are under planning. The following are the details:
Under construction:
8DAP/NPK Train 4 at Sikka for 5 lakh tonnes
8Nylon-6 at Vadodara for 15000 tonnes
8Water soluble fertilizers at vadodara for 20000 tonnes 
Projects Under Consideration
At Sikka
8Phosphoric Acid 1.65 lakh tonnes
8Sulphuric Acid unit for 6 lakh tonnes
At Dahej
8Amonia:  7.26 lakh tonnes
8Urea: 10 lakh tonnes
8Caprolactam: 1 lakh tonnes
8Melamine: 40,000 tonnes
8MMA: 50,000 tonnes
8PMMA:  25,000 tonnes
8Nylon 6: 30,000 tonnes
At Vadodara
8Melamine:  40,000 tonnes
Comment: There is no mo movement so far in the urea-ammonia plant as the company is currently studying the new policies in the sector. As for  the others, they in various stages of planning, company sources told this website     
  Details

Briefs

July 2: 8Crop advisories by Maharashtra and Andhra Pradesh
Crop advisories from state governments on what to do in case of deficient rainfall have implications for the fertilizer industry. For reference purposes, the website carries in its Reports sections the advisories sent out recently by Maharashtra and Andhra Pradesh.
8Impact on El-Nino on Indian agriculture
A paper dubbed "EL-Nino and Monsoons: Impact on India and the World" by HDFC Bank claims that the El Nino effect is overstated in Indian agriculture and that impact on actual rainfall is lower than what it is thought to be.
8Review of ongoing dryland and rainfed farming with an introduction by Narendra Modi
The website carries here a critical review of the ongoing dryland and rainfed farming and watershed development programme by central ministries with an introduction by none other than Narendra
Modi, who was then the chief minister of Gujarat. The comprehensive review has implications for the fertilizer sector.
8Minimum Support Price for Kharif
For reference purposes, the website carries here the full press note on Minimum Support Prices for Kharif Crops for 2015-16 season
8Monsoon Preparedness
The website carries here a paper on Monsoon Preparedness prepared by the Indian Institute of Water Management for reference of our readers
8FAI seminars
The 14th Fertilizer Industry Orientation Programmer for non-fertilizer executives will take place on 08-10 July, 2015, New Delhi.
FAI is also holding a two-day conference beginning August 21-22 on "Materials of construction for chemical process plants" in New Delhi.
Click on Reports for more Details
  Details

Notional freight for DAP & NPK: Put in cold storage

July 1: Well placed sources have now confirmed that the idea of lumping freight subsidy with the product subsidy for decontrolled fertilizers has now been put on permanent hold.
 
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"The proposal was pushed by the earlier secretary because he saw simplicity and value in it and now that he is not there, the idea seems to have been put in cold storage," a DOF official told this website.
 
8Given that there are too many complaints on the package, the DOF it seems is happier doing without it, for otherwise if the idea misfires and fertilizer availability drops in places away from ports or factories, the blame will come on the department, the official said.
  Details

Tata assets on sale-II: Adani rejects deal but others will line up

July 1: Conservative fertilizer companies may not be keen on acquiring the Tata assets but aggressive private companies may bid higher on the assumption that the fortunes of the industry will turn around following the government's new policies on gas pricing and direct transfer of subsidy to the farmers.
 
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Ambitious companies such as Chambal can big higher than what most other fertilizer companies in India will be willing to offer.
 
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Well placed sources said that the Adani group did look at the offer but did not find the price tag attractive enough.
 
8The Coromandel Group or even Deepak Fertilizers may look at the proposal but whether they will have the stomach for it remains a moot point.
  Details

Talcher plant: Award of gasification contract put on hold

July 1: The award of contract to Lurgi for the coal gasification plant for the Talcher ammonia-urea complex that will use the gasification route has been put on hold.
 
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This is on account of the fact that instead of two joint ventures -- one for the gasification plant and the other for the ammonia-urea complex -- there be only one.
 
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"The existing JVs will have to be dismantled, and a new JV with GAIL, RCF, CIL and FCIL will have to be formed and that is going to take some time," highly placed sources told this website.
 
8Will this also mean a postponement in the selection of licensors for the ammonia-urea plant?
  Details

Tata assets on sale-I: Valuation will be much lower than the asking price

July 1: What is the price that Tata Chemicals` fertilizer business is going to fetch?
 
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The asking price is reportedly $ 1 billion but the company may end up eliciting much less given the dismal plight of the fertilizer industry today.
 
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An estimate made by one Delhi-based fertilizer company who was given the offer to buy out the assets was only in the range of Rs 1500-Rs 2000 crore.
 
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In fact, the Tatas had put its Haldia phosphatic complex -- with a capacity to make 8 lakh tonnes of phosphatic fertilizers and 2 lakh tonnes of SSP -- on the block three years ago but there were no takers then. "The Haldia port has a low draft so it is not possible to berth large ships to bring in the raw material and that`s a serious drawback. And in any case manufacturing phosphatic fertilizers in India is not a viable proposition because we do not have a comparative advantage in the product," a senior fertilizer executive said.
 
8The Tatas do run an efficient urea unit at Babrala but as of today, running a urea complex is not a highly profitable business and companies in the sector do not think that the price tag for it will be high given the low return that the entire urea business fetches these days.
  Details

Alarm bells begin to ring on drying subsidy payments-II: Last year was a bad year, this year can be worse

June 30: 2014-15 was one of the worst years for the fertilizer industry.
 
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Despite the fact that claims worth Rs 37,477 crore were pending, the government went ahead an imposed a Rs 2000 crore cut in the 2014-15 budget!
 
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That was ironic indeed.
 The carry over liability from 2014-15 were:
 
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Indigenous urea: Rs 27,477 crore
 
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Decontrolled fertilizers: Rs 10,000 crore
 
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It is no wonder therefore that the subsidy budget for the current year is going to get exhausted so quickly.
 
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In this context, it is only natural for the industry to push for direct transfer of subsidy to the farmers.
 
8One vested reason -- as some critics would jocularly claim -- why the government may not want to go ahead with the direct subsidy scheme could well be that it would not have the liberty to withhold subsidy payments to the farmer or the retailer like it does with imputiny to the industry.
 Click on our Reports section for exhaustive details

Alarm bells begin to ring on drying subsidy payments-I: Money for urea will get over in July

June 30: The alarm bells are already ringing as subsidy allocation for the fertilizer industry is likely to get exhausted sooner this year than in the previous year.
 
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This would mean that the situation this year may turn out to be worse than last year unless of course the finance ministry decides to release adequate supplementary funds.
 
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Going by last year`s precedence, not much money is likely to be forthcoming once the current budget gets exhausted and that is going bad news indeed for the industry.
 
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There will be a rush again to the banks for working capital limits. The government does not pay the interest on such limits, leaving the companies to fend for themselves.
 According to latest indications, if "on account` payments are cleared, the following scenario will unveil:
 
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The subsidy on indigenous fertilizers will be exhausted in July, a month earlier than last year.
 
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The budget for indigenous decontrolled subsidy will be over by September as against November last year
 
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The government will run out of money to pay for imported decontrolled fertilizers by October this year against November in 2014.
 
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The subsidy allocation of Rs 12,300 for imported urea will get over depending upon imports made by the government.
 
8So the good months are just getting over, and now it is time to prepare for the hard times.
 Click on Reports for full details on the subsidy payments along with projections for the year relative to the previous year.

 
June 30: As India wraps up purchases, urea prices are set to fall   Details
June 29: Letter to the editor: Kolkata reader has his own direct transfer model   Details
June 29: Panki fertilizer plant: Energy efficiency cum expansion plan on cards   Details
June 29: Assam: 10 year fertilizer demand projection   Details
June 26: New policy for decontrolled fertilisers-III: Nothing new in waiver of state certification   Details
June 26: New policy for decontrolled fertilisers-II: Some clarifications not given   Details
 
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