2.1         The production target for 1998-99 has been fixed at 106.82 lakh tonnes of nitrogen and 30.27 lakh tonnes of phosphate. This represents a growth rate of 5.9% in nitrogen and 1.7% in phosphate as compared to the actual production in 1997-98. Production of nitrogenous and phosphatic fertilizers in April-November 1998 was 68.45 lakh tonnes and 19.76 lakh, respectively. This represented a growth rate of 4.6% vis-à-vis the corresponding period last year. In respect of urea (which is a controlled fertilizer), the production has been 126.60 lakh tonnes by the end of November which is 7.1% higher over the corresponding period in 1997-98. Also, the production of DAP registered a growth of 4.1% over the production in the corresponding period of the previous year.

2.2         At present, 6 major fertilizer projects involving an estimated capital cost of approximately Rs.4122.02 crore are under implementation in the country. When commissioned, they are likely to add an additional capacity of 9.75 lakh MTPA of urea, 7.90 lakh MTPA of NPK, 23.07 lakh MTPA of DAP and 1 lakh MTPA of NP fertilizers.

2.3         No new projects were being sanctioned for quite some time on account of differences in the perception of the demand supply scenario among different Departments. The issue of demand projections in urea has been discussed and projections have been revised in consultation with Ministry of Agriculture and Planning Commission. On the basis of this, the projects of PSUs/Cooperatives have been prioritised. Accordingly, the following 3 projects are being posed to PIB for approval:

i) KRIBHCO’s Ammonia-Urea Expansion Project at Hazira, Gujarat.

ii) KRIBHCO’s Ammonia-Urea Expansion Project at the existing site of FCI, Gorakhpur.

iii) RCF’s Ammonia-Urea Expansion Project (Third Stream) at Thal, Maharashtra.

2.4          The initiatives undertaken to set up joint venture projects in countries with better resource endowments so as to meet the growing demand of fertilizers in the country have made significant progress. The Government has approved the investment of RCF/KRIBHCO to make an equity contribution of US $ 69 million each in a joint venture in Oman for production of 14.52 lakh tonnes of urea and 3.30 lakh tonnes of merchant ammonia per annum. The Joint Venture Company i.e. Oman India Fertilizer Company has been registered in Oman on 18.2.98. All major agreements have been finalised.

2.5          The joint venture company of ‘Industries Chimiques du Senegal’ (ICS) which started production in 1984 has taken up a project for doubling the production of its phosphoric acid plants and development of new rock phosphates mines at a cost of about US $ 215 million. The Government has approved equity contribution of US $ 20 million by IFFCO in ICS Senegal for financing the expansion project. The project is expected to be completed within 30 months from the zero date of 1.7.98. ICS proposes to sell a major portion of the phosphoric acid produced in the expanded plant to India.

2.6          In order to involve a strategy for use of Liquefied Natural Gas (LNG) as feedstock, the Government has set up a Core Group on Fertilizer Companies with a view to exploring the feasibility of a delivery system of LNG essentially to meet the demand of fertilizer units and projects. The report of the Core Group is awaited.

2.7          The Disinvestment Commission has recommended disinvestment of shares of MFL, FACT, NFL and PPCL. Recommendations of the Commission are under process.

2.8           The revival package of HFC and FCI reformulated on the basis of a fresh technical appraisal by an expert group led by ICI from the stand point of the financial institutions were considered by the Government on 1.10.97. The Government has approved the proposal for the revamp of Namrup units of HFC at an estimated fresh investment of Rs.350 crore. The project is to be implemented within 30 months of award of Engineering, Procurement and Construction (EPC) contract. The groundwork for launching the project has started. To ensure timely implementation of the scheme, a plan budgetary support of Rs.70 crore has been made in the budget for 1998-99. The decision in respect of the other units HFC and FCI is still to be taken. Proposals in respect of the remaining units of HFC have been reviewed from the angle of
unit-wise viability and tie-up of funding arrangements and are presently under
inter-ministerial consultation.

2.9             The Government of India has continued the supply of urea to farmers at heavily subsidised prices. The farmgate price of urea, currently fixed at Rs.4000 per tonne, continues to be one of the lowest in the region.

2.10           Under a scheme administered by Ministry of Agriculture, substantial special concessions are also being provided on decontrolled phosphoric and potassium fertilizers with a view to encouraging the farmers to optimise the use of the three plant nutrients. The revised rates of special concession for Kharif 1998 have been announced recently which recognises the nitrogen content in complex fertilizers while deciding the level of subsidy. This would give substantial benefits to the manufacturers of complex fertilizers.

2.11           The consumption of urea in terms of sales registered 4% growth during Kharif 1998. The trend is expected to be maintained during Rabi 1998-99 during which the area under sowing of wheat and other crops has been substantial on account of unseasonal rains and consequent availability of moisture over more than expected area. Adequate and timely availability of urea was ensured throughout the country during Kharif 1998. There is no State which complained of non-availability of urea. During Rabi also, the availability of urea would be adequate in all the States to meet the estimated requirement.

2.12           In respect of the decontrolled fertilizers, the requirement had registered a sharp increase following the unforeseen rains during October. All possible support was extended both to the indigenous manufacturers and importers in movement of these fertilizers to the States thus making them available as per their requirement. Nearly 1.5 million tonnes of DAP was cleared from JNPT and a same quantity from Vizag port by according priority berthing of DAP vessels at both these ports. This helped in meeting the requirements of DAP in the States of Punjab, Haryana, Rajasthan, Madhya Pradesh, Uttar Pradesh and Bihar. This considerably reduced the complaints in respect of decontrolled fertilizers which would otherwise have been unmanageable. For future, the Government has decided to maintain buffer-stock of decontrolled fertilizers to meet any eventuality arising out of sudden spurt in demand. The Buffer Stocking Scheme shall be operated through Indian Potash Limited (IPL) and necessary preparations for it are under way.