Fertiliser industry seeks ‘sovereign fund’ to buy production assets abroad
New Delhi, Dec. 8:
Fertiliser
makers want the Centre to create a ‘sovereign fund’ that can enable
Indian firms set up joint ventures and acquire production assets abroad.
This is to ensure long-term supply of nutrients and raw materials at
reasonable prices here.
“It is for the Government to
decide the size of the fund. But given the capital costs of over
$1.1-1.2 billion for a 10-lakh-tonne (lt) a year potash plant, it could
start with that sum and then expand gradually,” R. G. Rajan, Chairman,
Fertiliser Association of India (FAI) and CMD of Rashtriya Chemicals and
Fertilisers (RCF), told presspersons here on Friday.
In
2011-12, India imported roughly $11.5 billion worth of finished
fertilisers. These included 78.34 lt urea (about $3.1 billion); 69.05 lt
di-ammonium phosphate ($4.5 billion); 39.85 lt muriate of potash ($2
billion), 36.75 lt NP/NPK complexes ($1.5 billion), 4.94 lt
mono-ammonium phosphate ($300 million), and small quantities of triple
super-phosphate (1.6 lt), sulphate of potash (0.54 lt) and ammonium
sulphate (0.36 lt).In addition, it imported large quantities of
fertiliser raw materials and intermediates valued at almost $5 billion.
These included 19.06 lt phosphoric acid ($2 billion), 75.22 lt rock
phosphate ($1.6 billion), 17.26 lt ammonia ($950 million) and 17.48 lt
sulphur ($375 million).
According to Satish Chander,
Director-General, FAI, imports constituted 39 per cent of the total
annual fertiliser materials consumption of 590.40 lt in 2011-12 and 45
per cent in terms of NPK nutrients. The percentage would go up further
if imports of raw materials and intermediates are also added. Given the
extent of dependence on imports, it would make sense for Indian firms to
establish overseas joint ventures on the lines of Oman India Fertiliser
Company. Last year, India imported 24.15 lt of urea from this venture —
in which Iffco and Kribhco hold 25 per cent each and Oman Oil Company
the balance — at a landed cost of $215.19 a tonne, as opposed to an
average $481.74 paid for imports from other sources.
The
fertiliser industry is pushing for similar investments abroad to secure
long-term supplies of fertilisers or raw materials at favourable
prices. “This is one way by which we can also fight the various global
cartels that are currently dictating the prices at which are importing.
Some of them have even resorted to cut production by half to maintain
prices at artificially high rates,” Chander added.
A
sovereign fund would basically pick up equity in overseas projects along
with the main promoters, which can then be leveraged to raise
additional debt funds.
Currently, there are as many
as three overseas fertiliser joint ventures under implementation and
scheduled for commissioning in the next 2-3 years. These include two
projects for manufacture of phosphoric acid at Skhira in Tunisia (the
Indian promoters are Coromandel International and GSFC) and Eshidiya in
Jordan (Iffco), and a 13-lt urea plant at Gabon, promoted by Tata
Chemicals, Olam International and the Republic of Gabon.
Besides,
RCF and Nagarjuna Fertilisers have proposed urea projects at Nyankrom
(Ghana) and Koko (Nigeria) respectively, though these are still on the
drawing board.
No comments:
Post a Comment