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Neem coated urea: Was the entire exercise in vain?.  MMTC finalizes one million tonnes of urea import at $ 288 CFR PMT.  Iranian supplies join those of Chinese to keep urea prices soft.  Chambal-ONGC JV for a urea plant in Tripura: It is still "on".  FCI Aravali to set up 1600 TPD SSP plant in Rajasthan.  VBC Group says it is still keen to set up a greenfield ammonia-urea complex.  What is the VBC Group all about?.  Rama Pulp and Paper to set up SSP and LABSA plants in Maharashtra: RFQs by September, 2015.  In our Reports section.  Latest update on revival projects-II: Pre-project activities begin at site.  June urea import: 5.90 LMT had come in.  Latest government data on gas consumption by individual urea units.  OMIFCO urea far cheaper than imports by State Trading Enterprises.  Latest update on revival projects-I: Commissioning date fixed as December, 2018.  Petronet cuts LNG imports from Qatar by one-third-III: Investigate irregularities that bled the nation tens of billions of dollars, says former Principal Advisor.  Petronet cuts LNG imports from Qatar by one-third-II: Tables Have turned .  Petronet cuts LNG imports from Qatar by one-third-I: Take-or-Pay obligations to be determined later.  Brief.  Rama Phosphate set to expand capacity.  Urea subsidy bills: Freight bills unpaid due to non-availability of funds.  
Neem coated urea: Was the entire exercise in vain?
Aug 04: It is difficult to believe that only six cases of diversion of subsidized urea and other fertilizers to industrial use were identified in 2014-15 and if these figures are indeed to be believed, what was the need then to move to neem coated fertilizers?
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Data released by the DOF says that diversions have been noticed only in Gujarat, Haryana, Karnataka, Maharashtra and Tamil Nadu over the last three years. And, importantly, these only a handful of cases have been indentified.ws4red
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The decision to use neem-coated urea is meant to check the diversion of urea from agricultural to industrial use but the data shows that identified cases of diversion to industrial usage has been equally rare in 2013-14 and 2012-13 when need coated urea was not in wide usage.
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There were only four cases in 2013-14 and six instances of diversion in 2012-13.
 The government now claims that there have been reports of diversion of urea to industrial use from "some quarters". No specific data is available on the extent of diversion or the quantum of diversion.
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Given these low figures, two scenarios are likely: one is that the institutional mechanism to catch diversions is not in place and the actual level of diversion is far higher than what comes under scrutiny or the government's effort to move to neem coated urea was a gigantic exercise that was not really justified by the evidence at hand.
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In the month of July (upto 28.07.2015), the total production of Urea is 18.96 LMT out of which 18.91 LMT is neem coated urea which is almost 100%. 
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MMTC finalizes one million tonnes of urea import at $ 288 CFR PMT
Aug 04: MMTC has finalized a one million tonne deal for import of urea into the country.
8The price established is $ 288.44 CFR PMT for the West Coast and $ 284.40 CFR in the East Coast.
8So far confirmations have come in for a total of 8 lakh tonnes of urea from 10 companies while the tender elicited responses from 27 international manufacturers and traders.
More confirmations are still awaited, until it all totals up to one million tonnes
 Click on Details for more on the companies which have confirmed supplies along with the quantity and port of delivery. Also given is the quantum of imports over the last three years of not just urea but also all other fertilizers, as well as sale and availability of fertilizers in the country as of now.
 Click on our Reports section for the full matrix of firm and optional quantities along with the name of the discharge port and CFR prices that were originally submitted by all 27 bidders.
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Iranian supplies join those of Chinese to keep urea prices soft
Aug 04: Iranian supplies are pushing worldwide urea prices down even as global markets remain weak.
 
8The Chinese too are offering lower prices, and together prices are going down.
 
8MMTC was able to take advantage of these factors to be able to push the CFR price down in its tender for one million tonnes of urea.
 
8The price of phosphates however crept $3 higher to $434.50 in the Gulf in a market that is edging towards the top of its price range over the last year.
 Click on our Reports section for more
Chambal-ONGC JV for a urea plant in Tripura: It is still "on"
Aug 04: It looks like the JV between Chambal Fertilizers & Chemicals Ltd and ONGC for a ammonia-urea complex in Tripura is still active though there were indications earlier that it was put in cold storage given the remote location and logistical nightmare involved in transporting urea form there.
 
8Chambal claims that a
non-binding Memorandum of Understanding (MOU) has been signed amongst Oil and Natural Gas Corporation (ONGC), Chambal and Government of Tripura to conceptualize and develop a gas based fertilizer plant in Tripura.
 8Subsequent to signing of MOU, a pre-feasibility study is underway. Based on outcome of the pre-feasibility study, identification of land and ascertaining the availability of gas, a decision will be taken in this regard.
 8The DOF said that it would facilitate the setting up of the plant by taking up the gas related matters like allocation of gas, providing gas connectivity etc with Ministry of Petroleum & Natural Gas as and when required.
 8The subsidy for urea produced will be provided as per the provisions of New Investment Policy (NIP)-2012 and its subsequent amendments.
 8ONGC sources however said that progress on the project has been "very slow".
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FCI Aravali to set up 1600 TPD SSP plant in Rajasthan
Aug 04: FCI Aravali Gypsum and Mineral (India) Ltd. is planning to set up a greenfield project with the capacity to make 800 TPD of Single Super Phosphate (SSP) and 800 TPD of Granular SSP (GSSP) at Pandoli, Rajsthan.
 8The power requirement is about 900 KW, which will be sourced from Ajmer Vidyut Vitran Nigam Ltd (AVVNL).
 8The company also proposes to use 2640 TPA fuel oil for a hot air generation and install a 125 KVA DG Set which will be use 15 LPH of High Speed Diesel (HSD).
 8The projected investment cost is Rs. 82 crore.
 8Following are the current hihglights:
 -Land preparation  activities are done.
 -Prefeasibility report is completed
 -Term of reference (TOR) have already been approved by the Environment Ministry (MOEF).
 -Capital approval is over.
 -Company sources said that, all clearance will be elicited by October/November 2015.
 -Contractor selection activities will be done by November/December 2015.
 -Commissioning will be the end of 2016.
 -Production start-up will be by Q1 2017.
 Click on our Report section for more
VBC Group says it is still keen to set up a greenfield ammonia-urea complex
Aug 03: VBC Fertilizer and Chemical Ltd, an offspring of the VBG (originally known as the Vizag Bottling Company) Group, had been trying to set up a greenfield urea-ammonia plant right since 2007 when it wrote to the DOF seeking allocation of 5 mmscmd of gas to manufacture 2 million tonnes of urea.
 8Not much was heard of the proposal till 2013 when the Andhra Pradesh government allocated 498 acres of land at Jayanthipuram. Water too was allocated to the project from the Krishna and Paleru rivers. An agreement was also signed with GAIL for supply of gas.
 
8The trial went cold since then and not much was heard of the project.
 
8Is there a revival of interest now? Yes, claims the management while speaking to this website.
 
8The company claims it is still keen to set up the project, now that a new urea policy and a pooled gas price mechanism have been put in place.
 Following are the highlights of the Rs 9
,600 crore.project
 
- Land preparation activities are done.
 - Pre Feasibility Report is underway.
 - Terms of reference (TOR) have already been approved by Environment Ministry (MOEF).
 - Capital approval activities are underway.
 - Contractor selection activities are underway.
 - Public hearing activities are underway, and company sources said that all clearance activities will be done by September/October 2015.
 
8VBC has ambitions of setting up not one but two ammonia plants each having a capacity of 2,200 metric tones per day (MTPD), two urea plants each with a capacity of  3850 MTPD, one ammonia nitrate plant (0.33 MMTPA) and one nitric acid plant (0.264 MMTPA) at Jayanthipuram, Andhra Pradesh
 
8The company has also proposed to set up a 2 x 67.5 MW captive power plant.
 Comment: In case the company is keen to go ahead with the project, it will probably be biting off more than it can chew. Setting up a urea plant is not easy in today's environment. The cost of gas is high and funding cost is higher still. The cost has been projected at Rs 9,600 crore but the actual bill may cross Rs 12,000 crore Whether the VBC group has this kind of funding capacity remains a moot point.
 Click on Reports for more
What is the VBC Group all about?
Aug 03: The VBC group was originally a bottling franchisee of Coca Cola. The group was started by Dr.M.V.V.S. Murthi, a former member of Parliament.
 
8The bottling unit was later sold to Coca Cola and the group then set up a ferro alloy manufacturing unit.
 
8Instead of being known as the Vizag Bottling Company, the promoters rechristened it as VBC Industries Ltd in 1987.
 
8The company then went on the make Ammonium Nitrate Prills, primary for the primarily for the mining industry, with technical assistance from Norsk Hydro and UHDE
 
8Subsequently, it diversified into the education sector and set up a university by the name of Gitam University.
 
8From education, it went into hotels in collaboration with the Hilton Group and eventually a 460 MW power plant was set up under the style of Konaseema Gas Power Ltd.
 
8The Grouip has fingers in many pies, and fertilizers seem to be one of them now. 
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Rama Pulp and Paper to set up SSP and LABSA plants in Maharashtra: RFQs by September, 2015
Aug 03:  Rama Pulp and Paper is planning a greenfield 400 MTPD of SSP plant and a 50 MTPD Linear Alkyl Benzene Sulphonic Acid (LABSA) unit at Wahegaon, Maharashtra.
 
8The power requirement of project is about 50 KW, which will be sourced from Maharashtra State Electricity Distribution Corporation Ltd (MSEDCL).
 
8The project investment cost is Rs. 34 crore.
 
8Speaking to this website, company sources said that project had elicited the environment clearance in May 2015.
 
8The RFQs will be released in August or September.
 
8The project to be completed by the end of 2016.
In our Reports section
Aug 03: 8Full details on the Kerala's Modified National Agricultural Insurance Scheme
8Latest government data on gas consumption by individual urea units
8Details on the FAI Seminar on Operation and Maintenance Problems of Acid and Complex Fertiliser Plants at Kandla (28-29th September 2015)
8Urea and decontrolled fertilizers sales statistics [2015-16, up to July, 2016)
Click on our Reports section for more
Latest update on revival projects-II: Pre-project activities begin at site
Aug 01: The Ramgundam fertilizer project is progressing on schedule, according to the latest update from the DOF.
 This is the latest update:
 June, 2015:
 
8Detailed Feasibility Report (DFR) finalized.
 
8Technology Evaluation completed.
 
8Overall Plot Plan has been finalized.
 
8Engineering, Procurement and Construction Management (EPCM) contract to EIL has been signed by RCF.
 July, 2015
 
8Pre-project activities started at site.
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June urea import: 5.90 LMT had come in
Aug 01: As of July 27, 2015, the import of urea stood at 5.90 LMT for the month as against a production of 18.30 LMT.
 
8Against this, the requirement of urea for the month is 31 LMT.
 
8Interestingly, the demand requirement for urea for Kharif 2015 has been pegged at 154.90 LMT of urea
 
8The Rabi 2014-15 requirement was at 160.10 LMT of urea
 Click on Details for more
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Latest government data on gas consumption by individual urea units
Aug 01: For reference purposes, the website carries here the latest government estimates of unit wise normative gas requirement of the urea industry, which is the biggest consumer of gas --  at 40 msmcmd -- in India
 The data is given in terms of:
 
8Normative gas requirement up to reassessed capacity and for maximum achievable capacity
 
8This information is sub-divided into those on the national gas grid and those which are not.
 
8The highest individual requirement is by RCF's Thal complex at 4 mmscmd up to reassessed capacity, going up to 5 mmscmd when maximum available urea capacity is taken into account. This is followed by Kribhco's Hazira unit, with a consumption of 3.67 mmscmd and 4.69 mmscmd.
 
8There is another set of data that shows the quantum of unit-wise subsidy paid in the last three years and up to June, 2015.
 Click on Reports for more
  Details
OMIFCO urea far cheaper than imports by State Trading Enterprises
Aug 01: Despite the fact that Oman had forced an increase in the gas price in the middle of the contract period, the cost of OMIFCO urea remained considerably lower than that of urea imported by the State Trading Enterprises (STE).
 
8The point to note is that in 2014-15, around 14.63 LMT of urea was imported from OMIFCO against a much larger volume of 72.86 LMT through STEs.
 
8Against this, the cost of OMIFCO urea was just $179 per tonne as against $303 per tonne via the STEs. The import of cheaper OMIFCO urea brings down the weighted average cost of overall urea imports into the country.
 
8The cost of urea stood at $172 for OMIFCO urea in 2013-14 as against $322 per tonne for urea through the STEs.
 
8Interestingly, 21 LMT of urea was imported from OMIFCO in 2013-14 while imports through STEs stood at 49.68 LMT.
 
8In 2012-13, urea prices were higher, at $277 per tonne for OMIFCO urea and $417.40 for imports through STEs.
 
8For reference purposes, the website also carries here details of imports, production and state-wise sale of all fertilizers over the last three years
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Latest update on revival projects-I: Commissioning date fixed as December, 2018
Aug 01: The government has set the commissioning date for the Talcher fertilizer plant has been set as December, 2018, according to a government government statement last week.
 
8Interestingly, it was initially decided that two joint ventures will be set up for the plant, one for coal gasification and another for the urea-ammonia complex but there are now questions about following through with the two JVs.
 
8What was also strange was that even though Coal India was part of the consortium, it was decided that GAIL and not the coal major will make an application on behalf of the JV that is meant to set up the coal gasification unit to the Coal Ministry for allotment of a coal block.
 
8The gasification plant is slated for award to Lurgi and instead of two JVs, there is talk of just one.
 
8As of now the latest official position is that "assets of Talcher Unit are being valued to decide the value of FCIL’s share in the JV, vetting of TEFR is also in the process, apart from Draft Joint venture Agreement being examined by the various PSU partners."
 
8While these issues are sorted out, the date of commissioning of the project has been fixed as December, 2018.
  Details
Petronet cuts LNG imports from Qatar by one-third-III: Investigate irregularities that bled the nation tens of billions of dollars, says former Principal Advisor
Jul 30: Petronet LNG Ltd seems to be attracting some critical attention of late.
 
8On April 27, 2015, the petroleum and natural gas minister informed Parliament that Petronet LNG was being investigated for alleged irregularities in gas purchase contracts.
 
8In an article written earlier this week, Surya P Sethi,  former Principal Advisor for Power and Energy in the Government of India, has alleged that Petronet has indulged in massive irregularities since inception. These irregularities have cost the nation tens of billions of dollars.
 
8Sethi goes on to claim that the company had entered into dubious contracts at the behest of vested interests that benefit from keeping Indian LNG import prices high.
 
8"Establishing mala fides would provide Government of India the legal basis for renegotiating these contracts," insists Sethi
 Click on Details to find out more on the specific charges levied by Sethi.
  Details
Petronet cuts LNG imports from Qatar by one-third-II: Tables Have turned
Jul 30: Clearly, Petronet LNG is unwilling to keep buying expensive gas from Qatar anymore given the sharp difference between the spot price and the long term contract price
 
8Take or pay obligations can be invoked by RasGas but clearly the Indian company is willing to take the risk as it continues to reduce its exposure to high cost LNG
 
8Petronet in turn is pushed by the bulk buyers -- in this case GAIL, IOC and BPCL -- who are finding it difficult to deal with irate Indian customers who are unwilling to pay such a high price for gas when spot gas is significantly cheaper.
 
8Petronet's conduct is technically not a breach of contract with RasGas as take or pay accounting is meant to be done at the end of the calendar year.
 
8When it comes to the other way round, Gulf countries too break contracts as was evident when Oman insisted on a gas price increase right in the middle of a 15-year deal to supply gas at $0.77/mmbtu to OMIFCO, a JV between the Oman Oil Company and two fertilizer cooperatives, Iffco and Kribhco.
 
8Oman in 2012 demanded that the price of gas be raised by $0.5/mmbtu every year up to a ceiling of $3/mmbtu.
 
8The Omanese were adamant, claiming that the price rise has to happen regardless of the agreement.
 
8The Oman government cited the firming up of international prices to enforce a higher price.
 
8In the face of an obstinate Oman, the Indian government had no option but to agree to the price hike. 
 Comment: It must be remembered that when crude prices were high, spot gas prices were significantly higher than the long contract price of LNG that Petronet LNG recieved from RasGas. This was because there is a ceiling on the crude price which is indexed to the LNG price. Now that the tables have turned, it may not be fair for Petronet LNG to throw in the towel. It is also not the Indian company's argument that it is reneging on the take or pay agreement because, for the time being, all that it is doing is postponing the impact of the take or pay clause until the end of the calendar year when books will be tallied. 
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Petronet cuts LNG imports from Qatar by one-third-I: Take-or-Pay obligations to be determined later
Jul 30: The Take-or-Pay obligations resulting because of a cut in LNG supplies by Petronet LNG Ltd (PLL) from Qatar will be determined alter the close of the calendar year (CY) as per the contractual provisions under the Iong-lerm contracts which PLL has signed with RasGas.
8Petronet has a 25-year deal with Qatar`s RasGas to buy 7.5 million tonnes of LNG annually. But because of the low gas prices in the spot market R-LNG off-take by PLL under the long-term sales contracts was around 63% of the quantity planned for the six months ended June 30, 2015, against the agreed Annual Plan for the Calendar Year (CY 2015).
8The price of LNG from Qatar comes close to $13 per million British thermal unit as compared to the $6-7 rate at which it is available in the spot or current market.
8In other words, spot LNG prices are about $6-$7 (per mBtu) cheaper than those under the long-term deal so customers are not willing to pay higher prices for the gas offered under the long-term deal.
8Prior to 2009, the long-term deal included a rebate in order to stimulate India`s gas demand, but with the discount now gone the spot market has become more attractive.
Click on Reports for more
  Details
Brief
Jul 30:  Gujarat State Fertilizers & Chemicals (GSFC) witnessed a fall in share price on Wednesday after posting a marginal decline in standalone net profit for the quarter ended June 2015. During the quarter, the profit of the company declined 6.77% to Rs 1,009 million from Rs 1,082.30 million in the same quarter last year. 
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Revenues for the quarter declined 12.77% to Rs 10,844.80 million, compared with Rs 12,432 million for the prior year period. Operating margin for the quarter stood at 12.16 percent as compared to 11.10 percent for the previous year period. Operating Income for the quarter was Rs 1,318.20 million, compared with Rs 1380.4 million in the previous year period.
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Shares of Gujarat State Fertilizers & Chemicals are trading at Rs 74.95, down Rs 0.3, or 0.40% at the Bombay Stock Exchange (BSE) on Wednesday at 10:10 a.m.
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The scrip has touched an intra-day high of Rs 76 and low of Rs 74. The total volume of shares traded at the BSE is 52,058.
Rama Phosphate set to expand capacity
Jul 30: Rama Phosphate Ltd is planning to expand its SSP capacity from 181,000 TPA to 315,000 TPA, GSSP from 66,000 TPA to 300,000 TPA at Umra, Rajasthan.
 
8The company is also planning for a greenfield 25,000 TPA Boronated SSP complex that will also house a 20,000 TPA LABSA. unit
 
8Company sources said that project had elicited environment clearance on 18 September 2014 but an amendment to the clearance is currently awaiting clearance.
 
8The expansions are to be completed by September 2017.
 The following amendments in the earlier EC are being proposed:
 
8Expand the capacity of Boronated SSP from 25,000 TPA to 75,000 TPA.
 
8Set up new unit of 75,000 TPA Zincated SSP.
 
8The total projected cost will be Rs  50 crore.
 Click on Reports for more
Urea subsidy bills: Freight bills unpaid due to non-availability of funds
Jul 29: The following is the latest status, as put out by the DOF, on payment of subsidy to urea manufacturers:
 
Details of unpaid
bills in respect of indigenous urea
 -- Regular subsidy:
Bills upto May, 2015 have been paid. Bills for the month of June, 2015 will be payable in August, 2015. As on date funds are available under the budget head: Nitrogenous Fertilizer (NF).
 -- Freight Bills: Bills upto January, 2015 have been paid. Bills from February, 2015 to June, 2015 worth of Rs 748.71 crores are pending due to non availability of sufficient funds under budget head: Freight Subsidy (FS).
 -- IPP Payment for 2012-13 and 2013-14:
Bills worth of Rs 720 crores are under process for payment.
 -- 5 % balance claims: Bills worth of Rs 2175.61 crores are yet to be paid because manufacturers have not submitted quality certificates.
 
Details of unpaid bills in respect of imported urea
 --
Inland freight: Bills worth Rs 473.79 crores are pending due to incomplete bills submitted by companies.
 -- Others: Bills worth Rs 6.63 crores are under process for payment.
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Jul 29: Proposals for new fertilizer plants: Details  Details
Jul 29: Fertilizer data  Details
Jul 29: Spurt in raw material imports   Details
Jul 28: FAI organizes an annual seminar  Details
Jul 28: Lessons for India: Untargeted energy subsidies do not benefit the poor, says a World Bank study  Details
Jul 28: A report on the US gas industry: A must-read for anyone involved in the gas business in India  Details
 
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