CAPACITY BUILD-UP

4.1.1  Presently, there are 59 large size fertilizer units in the country, manufacturing a wide range of nitrogenous and phosphatic/complex fertilizers. Of these, 34 units produce urea whereas 9 units produce ammonium sulphate as a byproduct. Besides, there are about 80 small and medium scale units producing single superphosphate. The total installed capacity as on 31.3.1996 was 93.06 lakh tonnes of nitrogen and 28.22 lakh tonnes of phosphate.

4.1.2 The gas-based urea plant of M/s.Oswal Chemicals and Fertilizers Limited (OCFL) at Shahjahanpur, U.P. with a capacity of 7.26 lakh tonnes of urea (3.34 lakh tonnes of nitrogen) per annum, started commercial production in December, 1995.

PROJECTS UNDER IMPLEMENTATION

4.2.1  A number of fertilizer projects involving an estimated capital cost of Rs. 6578.59 crores are under implementation in the country. When commissioned, they are expected to produce an additional 41.63 lakh MTPA of urea and 1.84 lakh MTPA of NPK fertilizers. The details of some major projects currently under implementation are given below:

i) M/s. Indian Farmers Fertiliser Cooperative Limited (IFFCO) are currently implementing a project for doubling the capacity of their gas-based ammonia-urea plant at Aonla (Distt. Bareilly, U.P.) at a cost of Rs.960 crores. Like-wise, M/s. National Fertilizers Limited are doubling the capacity of their gas-based Vijaipur (Distt.Guna, M.P.) ammonia-urea plant at a cost of Rs.987 crore. Both these projects are expected to be completed by the end of 1996 and would create an additional capacity of 14.52 lakh tonnes of urea (6.68 lakh tonnes of nitrogen) per annum;

ii) M/s. Madras Fertilizers Limited (MFL) are currently revamping their ammonia-urea and NPK plants at Manali (Near Madras) at a cost of Rs.487 crores. This will give additional production of 0.76 lakh tonnes of urea and 1.84 Lakh tonnes of complex fertilizers (0.66 lakh tonnes of nitrogen and 0.31 lakh tonnes of phosphate) per annum;

iii) M/s. Fertilisers and Chemicals Travancore Limited (FACT), Cochin are implementing a 900 TPD Ammonia Plant Replacement Project at a cost of Rs.618 crores. This project is expected to be completed by June, 1997;

iv) M/s. IFFCO have taken up a project for expanding the capacity of their ammonia-urea plant at Phulpur (Distt. Allahabad, U.P.) at an estimated cost of Rs.993 crores. This would create an additional capacity of 7.26 lakh tonnes of urea (3.34 lakh tonnes of nitrogen) per annum;

v) M/s. IFFCO have also taken up a project for revamp of their gas-based ammonia-urea plant at Kalol (Guiarat) at an estimated cost of Rs. 119.08 crores. This would result in additional production of urea to the extent of 1 .50 lakh MTPA (0.69 lakh MTPA of nitrogen);

vi) M/s. Nagarjuna Fertilizers & Chemicals Ltd. (NFCL) have taken up a project for expanding the production capacity of their existing plant at Kakinada by 4.95 lakh MTPA of urea (2.28 lakh tonnes of nitrogen); and

vii) M/s. Pyrites, Phosphates & Chemicals Ltd. (PPCL) have taken up a project for setting up a 300 MTPD single superphosphate (SSP) plant based on bought out sulphuric acid at Saladipura, District Sikar (Rajasthan) at a total estimated capital cost of Rs. 9.00 crores.

viii) M/s.Tata Chemicals Ltd. have taken up a project for expanding the capacity of their existing plant at Babrala (UP) by an additional capacity of 7.75 lakh tonnes of urea (3.56 lakh tonnes of nitrogen) per annum;

4.2.2 A statement giving the details of fertilizer projects under implementation is at Annexure-Ill.

PROJECTS UNDER CONSIDERATION

4.3.1 During the year, the Public Investment Board accorded second stage clearance for KRIBHCO's proposal to set up a nitrophosphate plant at Hazira, Gujarat at an estimated cost of Rs. 637.87 crores to produce 3.00 lakh MTPA of NP (20:20) and 2.85 lakh MTPA of CAN (25% N). The Committee of PIB also gave first stage clearance for IFFCO's proposals to expand its Kandla phosphatic fertilizer plant at an estimated cost of Rs.212.80 crores to produce an additional 2.11 lakh MTPA of P2O5 and set up a grass roots ammonia-urea plant at Nellore to produce 7.26 lakh MTPA of urea at an estimated cost of Rs.1468.20 crores.

4.3.2 In addition to the above projects, M/s. National Fertilizers Limited have a proposal for expansion of its existing plant at Panipat, leading to a capacity addition of 7.26 lakh tonnes of urea per annum. M/s.Chambal Fertilizers & Chemicals Limited is also contemplating the replication of its existing plant of similar capacity at Gadepan (Distt. Kota Rajasthan).

STRATEGY

4.4.1 The fertilizer industry registered an impressive growth, especially after the advent of the Green Revolution in the country. The pace of capacity addition has slackened some what in the recent years, mainly because of constraints in the availability of natural gas for setting up new nitrogen capacities, and stiff competition from the imported products in the case of phosphatic fertilizers. The ever growing demand for fertilizers and the hazards of overdependence on imports have to be kept in view while planning for capacity buildup in this industry in the coming years. It has been estimated that the fertilizer consumption during the terminal year of the Eighth Plan (1996-97) will be around 152.2 lakh tonnes in terms of nutrients. In order to keep the fertilizer demand-supply gap within reasonable limits, additional production capacities are being created/planned in spite of the handicaps mentioned above. Some of the projects are being conceived on the basis of naphtha as feedstock, with a facility to switch over to natural gas as and when it becomes available.

4.4.2 The installed capacity of nitrogenous fertilizers is expected to attain a level of 100.08 lakh tonnes by the end of the terminal year of the Eighth Plan (1996-97), as compared to the installed capacity of 93.06 lakh tonnes at the end of 1995-96. No major phosphatic capacities are, however, being added in the terminal year of the Eighth Plan period due to the prevailing demand and price uncertainties. Some of the existing phosphatic fertilizer plants have increased their capacity by following a low investment route of installing a pipe reactor. A new SSP unit of PPCL at Saladipura, Rajasthan having a capacity of 1 lakh tonne of SSP, is likely to start their production in the year 1996-97. The installed capacity of phosphate in 1996-97 is estimated at 30.13 lakh tonnes.

PRODUCTION

4.5.1   The production of nitrogenous fertilizers during 1994-95 was 79.45 lakh tonnes of nitrogen and that of phosphatic fertilizers 24.93 lakh tonnes of P2O5.

4.5.2 The production target for the year 1995-96 was set at 113.00 lakh tonnes of fertilizer nutrients, comprising 86.33 lakh tonnes of nitrogen and 26.67 lakh tonnes of phosphate. This represented a growth rate of 8.6% in nitrogen and 7% in phosphate production as compared to the production during 1 994-95. The production actually realised during 1995-96 was 113.35 lakh tonnes of nitrogen and phosphate, exceeding the total yearly target by 0.3%. The production of nitrogen rose by 10.5% and that of phosphate by 2.6% as compared to the production during 1 994-95.

4.5.3 The production of nitrogen would have been still higher but for the production in the two sick public sector companies viz. FCI and HFC. The production of nitrogen in FCI was 2.1 lakh tonnes, as against the target of 2.55 lakh tonnes. The production in HFC was 1.3 lakh tonnes, as against the target of 2.3 lakh tonnes.

4.5.4 The main reasons for the shortfall in production of phosphate during the year 1995-96 against the target are as follows :

i) Accumulation of large inventories of DAP in the plants due to demand stagnation.

ii) The production of phosphate is dependent on imported raw materials. Apart from an increase in dollar costs, the rupee cost of these inputs has gone up on account of the slide in the value of the Rupee; and

iii) Due to the steep increase in the unit price of phosphatic fertilizers, the consumption of low analysis complex fertilizers has increased at the expense of the high nutrient fertilizers like DAP.

CAPACITY UTILISATION

4.6.1 There has been an overall improvement in the levels of capacity utilisation over the years. The capacity utilisation of nitrogenous and phosphatic fertilizer plants during 1994-95 was 91.2% and 88.3%, respectively. The capacity utilisation of phosphatic plants had suffered during 1993-94 mainly due to closures and cut backs in production in a number of units. The unviability of domestic production in the face of free imports of DAP at much cheaper rates coupled with consumer resistance on account of a sharp increase in the open market prices after decontrol, had thrown production plans into a disarray. The drop in the level of utilisation of the installed capacity of nitrogen during 1993-94 was mainly due to reduced gas availability, unforeseen shutdowns in the Jagdishpur unit of lndo-Gulf Fertilizers and poor performance of the two sick public sector companies viz. HFC and FCI. The lower availability of nitrogen from a much reduced production of complex fertilizers also contributed to the decline.

4.6.2 The long term trend of a progressive step up in capacity utilisation was, however, revived in 1994-95 and reinforced in 1995-96 when the capacity utilisation attained the level of 96.9% in the case of nitrogen and 90.6% in the case of phosphate.

4.6.3 The capacity utilisation of the fertilizer industry is expected to improve further as more modern plants based on proven technology and equipment go on stream. The existing plants in the private, public and cooperative sectors are being encouraged to improve their capacity utilisation through revamping and modernisation and incorporation of dual fuel facilities, wherever feasible.

4.6.4 The unit-wise details of production and capacity utilization during 1994-95 and 1995-96 are given in Annexure-IV.

FEEDSTOCK POLICY FOR FERTILIZERS

4.7.1 The feedstock policy for nitrogenous fertilizers had hitherto envisaged establishment of new plants based mainly on natural gas. In view of the constraints in the availability of gas, it has become inevitable to set up new capacities based on alternative feedstocks such as naphtha. The promoters of these plants are considering the provision of alternate feedstock facilities for a switch over to gas as and when it becomes available. Conversely, the gas-based plants are being encouraged to provide for alternate facilities for the use of naphtha in case of difficulties in getting the required quantity of gas.

INDIGENOUS TECHNOLOGY & DEVELOPMENT OF KNOW-HOW

4.8.1 Two engineering consultancy organisations under the administrative control of the Department of Fertilizers, viz. Projects & Development India Ltd (PDIL) and FACT Engineering and Design Organisation (FEDO) offer total consultancy services to the fertilizer and allied chemical industries and also carry out R&D activities.

i) PDIL - PDIL has been a premier organisation in engineering and construction of fertilizer and allied chemical plants. It has been associated in the establishment of a number of nitrogenous and phosphatic fertilizer plants in the country. PDIL has to its credit the development of knowhow for ammonia and urea technology in substantial measure and its application in the design and construction of the 600/1167 tpd ammonia/ urea Namrup-III plant of HFC and the front end portion of Trombay-I ammonia plant of RCF. It was associated as Indian Consultant for all the mega sized plants at Thal, Vijaipur, Aonla, Jagdishpur, Gadepan, Babrala and Kakinada which are in production, and the expansion projects under implementation at Aonla and Vijaipur, Kakinada, Babrala and Phulpur. For the gas-based ammonia-urea project installed at Shahjahanpur, PDIL has acted as prime engineering consultant. Based on its own research and development efforts, PDIL has developed and established production facilities for a very wide range of catalysts used in various processes for the manufacture of fertilizers and allied chemicals. The catalysts produced from PDIL's Sindri plant are used in Fertilizer units all over the country with satisfactory performance. From the array of catalysts produced by PDIL, one recently developed copper promoted High temperature shift catalyst is charged in ZACL's Goa plant and is performing exceedingly well.

ii) FEDO - FEDO was the lndian Contractor for the ammonia plant of the Hazira project of KRIBHCO. It also handled the design and construction of the 2 x 1000 tpd sulphuric acid plants of Paradeep Phosphates Ltd. FEDO is the prime consultant for the 900 TPD ammonia project of FACT currently under implementation at Udyogamandal and has provided the detailed engineering for the revamp of ammonia plant of MFL. FEDO is also engaged in R&D work on pollution control, recovery of chemicals from effluents, etc.

4.8.2 Alongwith engineering capability, a diversified base for manufacturing and fabrication of equipment has been developed in the country. Today, roughly 70 per cent of the equipment required for a major fertilizer plant can be manufactured indigenously.

JOINT VENTURES

4.9.1 Due to constraints in the availability of gas, which is the preferred feedstock for the production of nitrogenous fertilizers, and the overwhelming dependence of the country on imported raw materials for the production of phosphatic fertilizers, Government is encouraging Indian companies to have joint venture production facilities, with buy-back arrangements, in other countries which have rich reserves of natural gas and rock phosphate.

4.9.2 The Govt. of India, Indian Farmers Fertiliser Cooperative Ltd. (IFFCO) and Southern Petrochemical Industries Corporation Ltd. (SPIC), are partners to the extent of 16% of the shareholding in a joint venture project in Senegal named 'Industries Chemiques du Senegal' (ICS Senegal). The company, with its plants based in Darou & M'Bao in Senegal, produces phosphoric acid and finished phosphatic fertilizers. The company started production in 1984 and after debottlenecking, has an installed capacity of 3.35 lakh tonnes of phosphoric acid per annum. During the year 1995, the company produced 3.22 lakh tonnes of phosphoric acid in terms of P205and achieved 96% capacity utilisation. The supplies of phosphoric acid to India from this venture in 1995 totalled 2.42 lakh tonnes.

4.9.3 Besides, the following overseas projects are under implementation/consideration:

i) A joint venture project in Jordan, to produce 2.24 lakh tonnes of phosphoric acid per annum, is being jointly implemented by M/s. SPIC and Jordan Phosphate Mines Company Limited. It is expected to be commissioned by the end of 1996.

ii) On 30th July, 1994, a Memorandum of Understanding was signed between the Government of India/KRIBHCO/ RCF and the Government of Sultanate of Oman/Oman Oil Company, expressing the interest of both the parties in jointly sponsoring the design, construction, financing and operation of a world scale fertilizer complex in Oman. A detailed feasibility report is being prepared envisaging setting up of plants to produce about 15 lakh tonnes of urea and 3.15 lakh tonnes of merchant ammonia per annum. It is estimated that this joint venture project would cost about US $ 1100 million and take about 3 years to complete from the zero date. The detailed feasibility report is expected to be available by June, 1996.

iii) The pre-feasibility report of a joint venture nitrogenous fertilizer project at Qeshm Island promoted by IFFCO/ KRIBHCO in partnership with Qeshm Area Authority of Iran is pending finalisation as confirmation is awaited in regard to the price of inputs and the period for which they will remain frozen.

4.9.4 Joint venture proposals in an exploratory stage include gas-based ammonia-urea plants in Syria and Tanzania. M/s. SPIC are also exploring the possibility of setting up a gas-based nitrogenous plant in United Arab Emirates (UAE).

ROLE OF PRIVATE SECTOR

4.10.1 The private sector has played a significant role in the development of fertilizer industry in the country. In fact, the first fertilizer plant (SSP) in the country was set up by M/s. EID Parry, a private sector company, in 1906. With this modest beginning, the private sector has come to occupy a prominent position in the Indian fertilizer industry. At present, the private sector accounts for 39.1 2% of the total installed capacity of nitrogen and about 61% of phosphate capacity.

4.10.2 The required coordination between the public and private sectors, is ensured by the Department of Fertilizers. Production targets for the industry are approved by the Government at the beginning of the year after discussions with all the companies in the various sectors. Marketing activities are coordinated in zonal conferences and state-wise and plant-wise allocations in respect controlled fertilizers are made under the Essential Commodities Act, 1 955, at the beginning of each crop season.

SINGLE SUPERPHOSPHATE

4.1 1.1 Single superphosphe (SSP) is a straight phosphatic fertilizer. At present, about 80 medium and small scale units, including 4 in the public sector, having a total annual installed capacity of 8.23 lakh tonnes of phosphate (P205), are engaged. the production of SSP. Alongwith, other phosphatic fertilizers, SSP was also decontrolled w.e.f. 25.8.1 992. The production of during 1995-96 was 4.77 lakh tonnes of phosphate (P205) nutrient.

PRODUCT MIX

4.12.1 Among the straight nitrogenous fertilizers, the country is currently producing urea, ammonium sulphate, calcium ammonium nitrate (CAN) and ammonium chloride. The only straight phosphatic fertilizer being produced in the country is SSP. The complex fertilizers under production include Di-ammonium phosphate (DAP), and several grades of nitrophosphates and NPK complexes. Urea and DAP are the main fertilizers produced indigenously accounting for 83.6% and 42.7% of the overall capacity of nitrogen and phosphate, respectively.