Growth of Fertilizer Industry

Capacity build-up

4.1.1 At present, there are 65 large size fertilizer units in the country manufacturing a wide range of nitrogenous and phosphatic/complex fertilizers. Of these, 39 units produce urea, 19 units produce DAP and complex fertilizers, 7 produce low analysis straight nitrogenous fertilizers and 9 produce ammonium sulphate as a by-product. This also includes seven major urea plants in which production had to be discontinued for reasons of safety/feedstock limitation, non-viability or financial constraints. Besides, there are about 79 small and medium scale units producing single superphospbote. The total installed capacity of fertilizer production in the country which was 110.71 lakh tonnes of nitrogen and 36.48 lakh tonnes of phosphate as on 31.3.2000 has risen to 116.88 lakh tonnes of nitrogen and 46.35 lakh tonnes of phosphate as on 1.12.2000.

Production

4.2.1 The-production of nitrogenous fertilizers during 1999-2000 was 108.90 lakh tonnes of nitrogen and that of phosphatic fertilizers, 33.99 lakh tonnes of phosphate. The production target for 2000-2001 was fixed at 112.14 lakh tonnes of nitrogen and 39.93 lakh tonnes of phosphate, representing a growth rote of 3.0% in nitrogen and 17.5% in phosphate, as compared to the actual production in 1999-2000. Production targets of both nitrogen and phosphate are less than the installed

4.1.2.1 UREA UNITS :1951 -2000

Note * This does not include subsequent investments.
**Total revamp cost for ammonia-urea and NPK plants.
P.S. = Product suspended.

capacity because at low production by RCF, FCI and HFC due to gas limitatons and equipment problems and production fluctuation in OCF:Paradeep and IGFC:Dahej. The actual production up to December 2000 was 83.87 lakh tonnes of nitrogen and 29.33 lakh tomes of phosphate. Taking 'N' and 'P' together, there was an overall growth of 4.8% over the production during the corresponding period of last year.

4.2.2 The production performance of both nitrogenous and phospbatic fertilizers during Kharif 2000 was, by and large, equal to target.

Capacity utilisation

4.3.1 The domestic fertilizer industry has attained levels of capacity utilisation which compare favourably with the best in the world. The capacity utilisation during 1999-2000 was 100.5% for nitrogen and 95% for phosphate. The capacity utilisation during 2000-01 is estimated at 96.6% for nitrogen and 91.6% for phosphate.

4.3.2 The capacity utilisation at the fertilizer industry is expected to improve as more and more modern plants, based on proven technology and equipment go on stream. The existing plants are being encouraged to improve their capacity utilisation through revamping and modernisation and incorporation of dual fuel/feedstock facilities, wherever feasible.

4.3.3 The unit-wise details of production and capacity utilisation during 1999-2000 and 2000-01 (estimated) are given in Annexure-lV.

Strategy for growth

4.4.1 The fertilizer industry has adopted the following strategy to increase fertilizer production:

i) Expansion/retrofitting/revamping of existing fertilizer plants;

ii) Setting up joint venture projects in countries having abundant and cheap raw material resources.

iii) To overcome the constraints in the availability of natural gas, alternative sources like liquefied natural gas and coal are being explored.

Projects commissioned during the year

i) The DAP Project of M/s. Indo Gulf Corporation Ltd., Dahej, Gujarat with a capacity of 4.00 lakh TPA of DAP has been commissioned in September, 2000.

ii) The NPK expansion project of M/s Coromandal Fertilizers Ltd., Vizag, with an additional capacity of 1.25 lakh TPA of NPK has been commissioned in July 2000.

iii) The urea Expansion Project of M/s National Fertilizers Ltd. at Nangal in Punjab with an additional capacity of 1.48 lakh TPA of urea has been commissioned and commercial production commenced w.e.f. 1-2-2001, three months ahead of the schedule.

Projects under implementation

Four major projects involving an estimated investment at Rs. 2461 crore are under implementation in the country at present. When commissioned, these are expected to add additional capacities of 3.80 lakh TPA of urea, 3.20 lakh TPA of NPK, 21.76 lakh TPA of DAP and 1.00 lakh TPA of NP fertilizers. The details at these projects are given below:

i) Hindustan Fertilizer Corporation Ltd., is revamping its Namrup unit at Namrup, Assam in the North-Eastern Region of the country at an estimated cost of Rs. 350.00 crore to produce an additional 3.80 lakh TPA of urea. The project is expected to be commissioned in May, 2001.

ii) Oswal Chemicals & Fertilizers Ltd. is setting up a now DAP/NPK/NP plant at Paradeep in Orissa at an estimated cost of Rs. 1832 crore to produce 15 lakh TPA of DAP, 3.20 lakh TPA of NPK and 1.00 lakh TPA of NP fertilizers. Trial production from this project has started in April, 2000 and commercial production is expected to commence by the end of 2000-2001.

iii) Gujarat State Fertilizers & Chemicals Ltd. is implementing a project for expanding the capacity of its plant at Sikka, Gujarat by 3.96 lakh TPA of DAP at an estimated cost of Rs. 180 crore. The project is expected to be commissioned in July, 2001.

iv) Godavari Fertilizers and Chemicals Ltd. is implementing a project for expanding the capacity of its plant at Kakinada, Andhra Pradesh, by 2.8 lakh TPA of DAP at an estimated cost of Rs. 99.13 crore. The project is expected to be commissioned in December, 2001.

A statement giving the details of fertilizer projects under implementation is given in Annexure-V.

Projects under consideration

4.7.1 Project proposals involving a total investment of Rs. 5922 crore for creating an additional capacity of 30.72 lakh TPA of urea, have been posed by Public Sector Undertakings/Co-operative Societies for investment approval of the Government under the prescribed procedure. These are:
i) Expansion ot Hazira plant of KRIBHCO in Gujarat.
ii) A new urea plant to be set up by KRIBHCO at the existing site of FCI's Gorakhpur Plant in Uttar Pradesh.
iii) Expansion of Thal Plant of RCF in Maharashtra.
iv) A grassroots urea plant to be set up by IFFCO at Nellore in Andbra Pradesh.

4.7.2 These project proposals have been accorded 'in principle' approval by the Government subject to investment appraisal by Public Investment Board (PIB). Investment appraisal of these projects has been undertaken by the PIB in its meeting held on 9.7.99. In June, 2000, the Government considered and deferred the proposal for taking a final investment decision on the projects.

Feedstock policy

4.8.1 The feedstock policy for nitrogenous fertilizers had hitherto envisaged establishment of new plants based mainly on natural gas. Realising the constraints in the availability of natural gas which is the preferred feedstock, Department of Fertilizers had set up a Core Group of Fertilizer Companies with a view to exploring the feasibility of importing LNG by forming a consortium of fertilizer companies, along with other interested economic operators, for fertilizer sector in particular and other complementary sectors such as power, domestic fuel etc.

4.8.2 The Core Group submitted its report to Department of Fertilizers in March, 1999. The Core Group in its report had recommended setting up of a 7 million tonne per annum LNG project which envisages installation of regasification facility at Kishorprasad in Orissa to be implemented in two phases in a period of seven and a half years at an estimated cost of Rs. 21832 crore. The report of the Core Group has been examined by the Government. Based on the preliminary examination of the report, Government has reactivated the Core Group of fertilizer companies on 26.5.2000 with direction to prepare a detailed feasibility report for setting up of an integrated chain of LNG supply in the country.

4.8.3 Further, with a view to exploiting abundant resources of coal in the country as a feedstock for production of fertilizers, Department of Fertilizers has constituted a Task Force in March 2000 under the Chairmanship of Secretary (Fertilizers) consisting of representatives from Ministry of Scientific & Technology Ministry at Power, Ministry of Coal, Council at Scientific and Industrial Research, Fertilizer Association of India and Project & Development India Lid. The Task Force will explore the possibility of using coal as feedstock for the manufacture of fertilizers in the country. The report of the Task Force is expected soon.

Joint ventures abroad

4.9.1 Due to constraints in the availability of gas, which is the preferred feedstock for the production of nitrogenous fertilizers, and the near total depedence of the country on imported raw materials/ intermediates for production of phosphatic fertilizers /the Government has been encouraging Indian companies to establish joint venture production facilities, with buy back arrangement in other countries, which have rich reserves of natural gas and rock phosphate.

4.9.2 The Governmental India, Indian Farmers Fertilizer Cooperative Ltd. (IFFCO) and Southern Petro-chemicals Industries Corporation Ltd. (SPIC), are equity partners and are collectively holding 10.64% of the share in the joint venture company in Senegal named 'Industries Chemiques du Senegal' (lCS). The company produces phosphoric acid and finished phosphatic fertilizers in its plants located in Darou and M'Bao in Senegal. It started production in 1984 and after debottlenecking, attained an installed capacity of 3.5 lakh MT of phosphoric acid per annum. During the year 2000, the company produced 2.95 lakh MT of phosphoric acid in forms of P205, achieving 89.4% capacity utilisation. The supplies of phosphoric acid to India from this venture in 2000 totalled 2.50 lakh MT.

4.9.3 From 1.1.96, Compagnie Senegalaise Phosphates de Taiba (CSPT), a mining company which supplied rock phosphate to ICS, has been merged with it. ICS is now implementing a project for doubling the production capacity of its phosphoric acid plants and development of new rock phosphate mines at a cost of about US $ 250 million. ICS proposes to sell a major portion of the phosphoric acid produced in the expanded plant to India. Government have approved equity contribution of US $ 20 million by IFFCO in ICS for financing the expansion project. The expansion activities are in progress and the project is likely to be commissioned in March 2001.

4.9.4 A joint venture project in Jordan to produce 2.24 lakh MT of phosphoric acid per annum jointly implemented by SPIC and Jordan Phosphate Mines Company Limited is under production since May 1997.

4.9.5 A Joint venture between Office Cherifien Deg. Phosphates, Morocco and Chambal Fertilizers & Chemicals Ltd. (CFCL) to produce 3.30 lakh tonnes of phosphoric acid at an estimated cost of US$ 228 million has been set up in Morocco. CFCL is holding 50% of the equity of JVC. The project was commissioned in October 1999.

Projects under implementation/ consideration

4.10.1 A Memorandum of Understanding was signed on 30.7.94 between the Government of lndia/ KRIBHCO/ RCF and the Government of Sultanate of Oman/Oman Oil Company, expressing the interest of both the parties in sponsoring the design, construction, financing and operation of a world scale fertilizer complex in Oman. The Joint Venture Agreement for the project was signed in April 1997.

4.10.2 Based on a Detailed Feasibility Report which envisaged the production of about 14.52 lakh MT at urea and 3.30 lakh MT of merchant grade ammonia per annum, the Government has approved on 1.12.97 the investment proposal of RCF/KRIBHCO to make an equity contribution of US $ 69 million each in the Joint Venture Company Oman India Fertilizer Company which was registered in Oman on 18.2.98. However, primarily on account of the continuous and significant variation in urea prices in the international market the project proposal had to be revised and restructured. The revised and restructured project was approved by the Government on 20.6.2000, subject to expeditious resolution of outstanding issues.

4.10.3 A Memorandum of Understanding (MOU) was signed between Government of India / IFFCO & KRIBHCO (INDCONS) and Govt. of Iran / Qeshm Free Area Authority (QFAA) on 6.3.94 for exploring the possibility of setting up a fertilizer plant in QFAA. A supplementary MOU was signed on 26.11.96, reflecting the agreed position of the joint venture partners on the price of input required for the proposed nitrogenous fertilizer project. The Feasibility Report for the establishment of a 1500 MTPD ammonia and 2200 MTPD urea project at an estimated cost of US $ 470 million has been appraised and adopted by the joint venture partners.

4.10.4 SPIC is setting up a gas-based nitrogenous fertilizer plant at Dubai in United Arab Emirates to produce 4.00 lakh tonnes of urea at an estimated cost of US$ 170 million. The plant and equipment have already been procured and the plant is expected to be commissioned by the second quarter of 2002.

Single Superphosphate

4.11.1 Single Superphosphate (SS) is a straight phosphatic fertilizer. Along with other phosphatic fertilizers, SSP was also decontrolled w.e.f. 25.8.1992. At present about 79 medium and small scale units, including 5 in the public sector, having a total annual installed capacity of 10.02 lakh MT of phosphate (P2O5). are engaged in the production of SSP. The estimated production of SSP during 2000-01 is about 4.62 lakh MT of phosphate (P205) nutrient as against 5.13 lakh MT in 1999-2000.

Produce Mix

4.12.1 Among the straight nitrogenous fertilizers, the country is currently producing urea, ammonium sulphate, calcium ammonium nitrate and ammonium chloride. The only straight phosphatic fertilizer being produced in the country is SSP. The complex fertilizers under production included di-ammonium phosphate (DAP) and several grades of nitrophosphates and NPK complexes. Urea and DAP are the main fertilizers produced indigenously accounting for 83.8% and 52.3% of the overall capacity of nitrogen and phosphate, respectively.

Bio-fertilizers

4.12.1 Bio-fertilizers are bacterial cultures mixed with appropriate inert material, which is referred to as a carrier. Certain strains of bacteria, algae and fungi are known to have capabilities of fixing atmospheric nitrogen for use by the crops, while some other species can mobilise unavailable soil phosphorous into available farm to be used by the crops. These are renewable source of energy and are considered environmentally safe source of nutrients.

4.12.2 Application of bio-fertilizers can supplement the availability of nitrogen to crop plants through biological nitrogen fixation. It can, also increase the availability of native and applied phosphates through solubilising non-available form of Potash Application of bio-fertilizer is eco-friendly and low cost technology. Application of nitrogen fixing bio-fertilizers can add 20-80 kilogram nitrogen per hectare depending upon the crop and soil condition. In spite of such benefits, farmers have not adopted this practices adequately as the bio-fertilizer strains are crop and location specific. Considerable extension efforts will be needed to convince the farmer about its proper use and benefit. There are also certain problems in marketing and maintaining quality control. Rhizobium, Azotobactor, Azosprillim and PSM bio-fertilizers are largely in production through different agencies. However, the demand is not enough to utilise the full capacity. Bio-fertilizer usage is popular to some reasonable extent in the States of Madhya Pradesh, Maharashtra and Tamil Nadu, India is also the largest producer and consumer of biofertilizers in the world. At present there are about 110 units producing bio-fertilizers. Installed capacity of the bio-fertilizer production in the country is about seventeen thousand tomes with an annual production often thousand tonnes. The annual potential demand has been estimated to be around 40 thousand tonnes.

4.12.3 Department of Agriculture and Cooperation (DAC), Ministry of Agriculture, in the Government of India is entrusted with the task of promotion of bio-fertilizers and running of the Central Sector and centrally sponsored scheme (CSS) namely 'National Project on Development and Use of Biofertilizers' for promotion and use of biofertilizers which includes the scheme of giving one time grant of Rs. 20 lakh for setting up of a bio-fertilizer plant of 150 tonnes capacity per annum. DAC is encouraging the use of bio-fertilizers and compost/ farm yard manure in agriculture through the CSS as a method of supplementing the use of chemical fertilizers with a view to increasing the crop production and maintenance of soil fertility.

National Seminar on Bio-Fertilizers and Micro Nutrients

4.12.4 The accelerated use of chemical fertilizers alone is not considered conducive for sustaining long term agriculture. Nitrogerious fertilizers have potential for increasing nitrous oxide emission besides charging ground water with nitrates. Phosphatic fertilizers also at times come under scrutiny for their environmental acceptability on account of their high cadmium content. Supplementation of major nutrients through eco-friendly alternate sources and application, thus have gained importance in sustainable crop production.

4.12.5 Under this back drop the Department of Fertilizers organised National Seminar on 'Bio-fertilizers and Micro nutrients' on 8th February, 2001 atVigyan Bhawan, Annexe 'E', New Delhi. This seminar was participated by eminent Biofertilizer manufacturers, Agriculture Scientists, Vice Chancellors of Agriculture Universities, academicians, administrators, policy makers and progressive farmers.

4.12.6 The seminar resolved for constitution of two task forces on Bio-fertilizers and micro nutrients to recommend appropriate strategy for promotion of bio-fertilizers and micro-nutrients.

4.12.7 Assistance amounting to Rs. 301 lakh have been given for establishment of bio-fertilizer units in some of the states during the last 3 years. This includes a scheme run by the DOF till 1997-98. The details as under: