New Urea Policy-2015 announced with the aim of maximizing indigenous urea production, promoting energy efficiency in urea production, and rationalizing subsidy burden on the government;

New Urea Policy-2015 announced with the aim of maximizing indigenous urea production, promoting energy efficiency in urea production, and rationalizing subsidy burden on the government;

Setting up 8.6 LMTPA Urea plant in Namrup (Assam) and taking forward revival of Talcher, Ramagundam, Sindri, Gorakhpur and Barauni units.

Year End Review –Fertilizers

The Department of Fertilizers, Government of India has taken various initiatives during the last one year. These initiatives aim at working in the direction of promoting the indigenous production of Fertilizers, and making them available to the farmers in time.

New Urea Poilcy-2015: Based on the CCEA decision, the New Urea Policy-2015 (NUP-2015) has been notified by Department of Fertilizers on 25th May, 2015 with the objectives of maximizing indigenous urea production; promoting energy efficiency in urea production; and rationalizing subsidy burden on the government. It is expected that the domestic urea sector would become globally competitive in terms of energy efficiency over a period of three years. On the basis of actual energy consumption and preset norms, the units have been divided into three groups and revised energy consumption norms have been fixed for next three financial years and target energy norm have been fixed for 2018-19. It will drive urea units to select better technology and different measure to reduce energy consumption. The higher energy efficiency due to aforesaid measure will reduce subsidy bill. It is expected that there would be reduction in the subsidy burden of the government in two ways - reduction in specific energy consumption norms and import substitution on account of higher domestic production. It is expected that the new urea policy will lead to additional production of   1.7 LMT annually in the next three years.

Neem Coating of Urea: Vide Department of Fertilizers notification dated 25th May, 2015, it has been made mandatory for all the indigenous producers of urea to produce 100% of their total production of subsidized urea as Neem Coated urea. Since NCU cannot be used for industrial purposes, illegal diversion of subsidized urea to non-agricultural use would not be possible. By curbing this illegal diversion of Urea for non-agricultural purposes, the government aims to prevent subsidy leakages.

New Investment Policy (NIP) – 2012 : The Government had notified the New Investment Policy 2012 on 2nd January 2013 to facilitate fresh investment in urea sector and to make India self sufficient in the urea sector. Further, the amendment to NIP – 2012 has been notified by this Department on 7th October, 2014 including the provision that “only those units whose production starts within five years from the date of this amendment notification will be covered under the policy.  Subsidy will be given only upon domestic sale as at present for a period of 8 years from the date of start of production. Thereafter, the units will be governed by the urea policy prevalent at that time.”

As per the said policy, to ensure seriousness/credibility of the project proponents under NIP-2012 and for timely execution of the projects, all the project proponents are required to furnish Bank Guarantee (BG) of Rs. 300 crores for each project. The BG is linked to milestones in the project cycle. Out of Rs. 300 crores, Rs. 100 crores of BG will be released after finalization of LSTK/ EPCA contractors and release of advance to the contractor’s account; Rs. 100 crores of BG will be released on completion of equipments ordering and supply to the site or midpoint of the project cycle, whichever is earlier; and the balance of Rs. 100 crores of BG on completion of the project.  PSUs are, however, exempted from furnishing the BG.

Continuation of production of urea from Naphtha as feedstock: Based on the CCEA Decision, vide notification dated 17th June, 2015, Department of Fertilizers allowed  continuation of production of the three Naphtha based urea units namely, Madras Fertilizer Limited – Manali, Mangalore Fertilizers & Chemicals Limited – Mangalore and Southern Petrochemicals Industries Corporation – Tuticorin till these plants get assured supply of gas either by pipeline or by any other means. 

Setting up 8.6 LMTPA Urea plant in Namrup (Assam): Union Cabinet in its meeting held on 21.05.2015 has approved Setting up a New brown field Ammonia-Urea complex of minimum 8.646 LMTPA at Namrup with the existing premises of BVFCL on PP basis ( by inviting bids from public/private sector for 52% equity in the project). Transaction Advisor (TA) for selecting the 52% equity partner of the proposed JV appointed on 13.10.2015.

Taking forward revival of Talcher, Ramagundam, Sindri, Gorakhpur and Barauni units: The CCEA in August 2011 had approved revival of all the Units of FCIL and HFCL on nomination route and bidding route.  As per the latest decisions of the CCEA/ Cabinet Talcher and Ramagundam units of FCIL are to be revived through nomination route  and Gorakhpur & Sindri units of FCIL and Barauni unit of HFCL are to be revived through bidding route.

a.    Revival of Talcher Unit

Talcher unit is to be revived by the consortium of M/s. Rashtriya Chemical & Fertilizers Limited (RCF), M/s Coal India Limited (CIL) and M/s Gas Authority of India Limited (GAIL). Status of revival of Talcher unit is as under:

Ø  The pre-project activities for revival of Talcher unit are in progress to set up a coal fertilizer plant.

Ø  The Memorandum of understanding signed on 5.09.2013 and JV agreement on 27.10.2015 among consortium partners.

Ø  JV Company name i.e. “Rashtriya Coal Gas Fertilizers Limited”, has been formed.  Selection of coal gasification technology is in progress.

Ø  SBICAP has been appointed by CIL to carry out valuation of FCIL’s assets and to review TEFR, report by 21st November, 2015. The project is likely to be completed by March’ 2019.

Ø  The Project likely to be completed by 31.3.2019.

b.  Revival of Ramagundam Unit

Ramagundam unit to be revived by the consortium of M/s. Engineers India Limited (EIL) and M/s. National Fertilizers (NFL).   Status of revival of Ramagundam unit is as under:

Ø The Joint Venture agreement signed on 14.1.2015.

Ø  JV company, namely, Ramagundam Fertilizers & Chemicals Limited (RFCL) incorporated on 17.2.2015.

Ø  Detailed Feasibility Report (DFR) finalized on 22.6.2015.

Ø  Pre-Project activities started at site.

Ø  Technology licensor appointed on 24.09.2015

Ø The Project likely to be completed by 30.9.2018.

c.         Gorakhpur & Sindri units:

Gorakhpur and Sindri units of FCIL are to be revived through ‘bidding route’. The status of revival of Gorakhpur & Sindri unit is as under: -

Ø  An Empowered Committee under the chairmanship of CEO, NITI Aayog was constituted on 27.04.2015 for Gorakhpur and on 17.6.2015 for Sindri to oversee revival process.

Ø  Requests for qualification (RFQ) inviting expression of interest (EOI) for Gorakhpur and Sindri Units were published on 26.8.2015 and 17.9.2015 respectively.

Ø   Pre-bid conferences were also held on 8/9/2015 and 10/10/2015 respectively.

Ø  Survey of land at Gorakhpur and Sindri has been done to decide quantum of land to be required for the project.

Ø   Valuation of all the existing usable & unusable assets for Gorkhpur & Sindri has been completed.     Investor meets are also organised for generating better response.

d.         Barauni unit:

Barauni unit of HFCL is to be revived through ‘bidding route’ as per CCEA approval in 2011. HFCL is before BIFR.  The Cabinet in its meeting held on 31.3.2015 approved revival of Barauni unit through ‘bidding route’ by demerging Barauni unit from HFCL.  The status of revival of Barauni unit is as under:

Ø  An Empowered Committee has been constituted on 27.04.2015.

Ø  The EC in its first meeting held on 31.07.2015 recommended the proposal of DOF for taking a fresh proposal to Cabinet for bringing out HFCL from the purview of BIFR and revive the unit by HFCL itself through bidding route.

Ø  The Cabinet note has been circulated for inter-ministerial consultation 10.09.2015.

Requirement, availability and Sales of Fertilizes:

Ø  Ever highest urea production of 141.66 LMT in the country during 2015-16 (period April 2015 to October, 2015) in comparison to previous years.

Ø  Ever highest Urea production during the month of October, 2015 was 21.58 LMT in comparison to previous month of any year.

Ø  Ever highest development of Railway rakes for fertilizers movement for the period from April 2015 to October, 2015 at 10894 rakes in comparison to last three years.

Ø  Highest sale of P&K fertilizers during 2015-16 (period April to October, 2015) was 125.91 LMT in comparison to previous three years.