RIL plans mega fertilizer plant

Global-Scale Unit To Buy KG Gas At Market Rates; Co Moves FertMin

RELIANCE Industries (RIL) is planning to build the biggest greenfield fertiliser

Capacity in the country. The company has submitted a proposal to the fertiliser

Ministry to set up a manufacturing plant of global scale (up to 4 million tonnes). RIL

Has proposed to use some of the Krishna-Godavari gas as feedstock bought at

Market prices. RIL has been facing a backlash from fertiliser and power companies

Over the gas price it is offering them. Now, plans are afoot to take up the challenge

by turning a gas user itself. RIL recently invited bids from fertiliser and power

companies for gas from its KG find. It has argued that fertiliser subsidies can be

brought down annually by almost Rs 4,000 crore if fertiliser companies switched to

natural gas from naphtha. The delivered price for KG gas is expected to be just over

$6 per million British thermal units (mmbtu).

Confirming the development, a senior RIL official said that the proposed plant

Would play on the economies of scale to build a world-class facility. "We are

Confident that we can build the plant at 30-40% lower costs," he said. RIL, which is

Carrying out a feasibility study, has asked the fertiliser ministry to provide some

Clarifications on the upcoming fertiliser policy and the pricing structure. "We are

Given to understand that fertiliser companies would be allowed to sell the products at

Import parity prices. In other words, pricing controls on fertilisers may be removed.

Instead, fertiliser subsidies for the farm sector will be given directly to farmers and

not to fertiliser companies," he said. The government is reviewing the pricing policy,

which should throw some light on the future pricing trends in fertilisers. India is

currently facing a huge shortage in fertilisers, importing nearly 5 million tonnes

every year. India had made moves to set up fertiliser capacities in gas-producing

countries like Oman to take advantage of fuel availability there. Now, with abundant

gas reserves in the KG basin, RIL will have an edge over others, with large reserves

at its disposal. RIL has also sought clarifications from the government on the tax

sops that would be available for companies seeking to invest in the fertiliser sector.

India is 3rd-largest fertiliser producer

ACCORDING to the fertiliser ministry, the total installed production capacity for

fertilisers in 2003 was 121.10 lakh MT of nitrogen (inclusive of an installed capacity

of 208.42 lakh MT of urea after reassessment of capacity) and 53.60 lakh MT of

phosphatic nutrient, making India the third-largest fertiliser producer in the world.

There are 57 large fertiliser plants in the country, manufacturing a range of

nitrogenous, phosphatic and complex fertilisers. Out of these, 29 produce urea, 20

produce DAP and complex fertilisers, 7 produce low analysis straight nitrogenous

fertilisers and 9 manufacture ammonium sulphate as a by-product.