Natural gas shortage to clip fertiliser industry

Mahua Venkatesh in New Delhi, Business Standard, January 07, 2003

The Indian fertiliser industry will face serious shortage of natural gas in the next five years in spite of the recent gas finds in the country, as a result of which the gap between demand and supply of fertiliser in the country will widen significantly.

As per government data, in 2003-04, there will be a shortage of 32 lakh metric tonne of urea and 11 lakh metric tonne of di-ammonium phosphate (DAP) in case of a 90 per cent capacity utilisation.

The shortage will touch 10 lakh metric tonnes of urea and 3 lakh metric tonnes of DAP in 2003-04 with 100 per cent capacity utilisation.

Similarly in 2004-05, there will be a deficiency of 38 lakh metric tonne of urea and 16 lakh tonne of di-ammonium phosphate with a 90 per cent capacity utilisation owing to non availability of natural gas.

In case of 100 per cent capacity utilisation, the figure is expected to touch 17 lakh metric tonnes for urea and 8 lakh metric tonne for DAP during the same period.

"The gap between demand and supply will keep increasing with course of time. With the demand supply-discrepancy, India will also have to import huge quantities of urea for short and medium term purpose. The global prices of urea is also likely to increase in the next couple of years," official sources told Business Standard.

The new gas finds in the country will come handy only after a few years, a senior government official said, adding that the industry must focus on joint venture projects abroad immediately for easy and cheap availability of feedstock.

The cost to lay pipelines for re-gasification of liquefied natural gas (LNG) is about Rs 4000 crore, the official added.

"Therefore the immediate solution to the problem is to focus on joint ventures abroad. Till now most overseas joint venture projects has been for manufacture of phosphoric acid," the official added.

Meanwhile, India is already looking at setting up a fertiliser project in Iran. It is understood that talks are on with a local Iranian company for a possible joint venture.