FERTILIZERS

Fertiliser is generally defined as "any material, organic or inorganic, natural or synthetic, which supplies one or more of the chemical elements required for the plant growth"

Chemical fertilizers have played a vital role in the success of India's green revolution and consequent self-reliance in food-grain production. The increase in fertilizer consumption has contributed significantly to sustainable production of food grains in the country. The Government of India has been consistently pursuing policies conducive to increased availability and consumption of fertilizers in the country

The Indian Fertilizer industry had a very humble beginning in 1906, when the first manufacturing unit of Single Super Phosphate (SSP) was set up in Ranipet near Chennai with an annual capacity of 6000 MT. The Fertilizer & Chemicals Travancore of India Ltd. (FACT) at Cochin in Kerala and the Fertilizers Corporation of India (FCI) in Sindri in Bihar were the first large sized -fertilizer plants set up in the forties and fifties with a view to establish an industrial base to achieve self-sufficiency in foodgrains. Subsequently, green revolution in the late sixties gave an impetus to the growth of fertilizer industry in India. The seventies and eighties then witnessed a significant addition to the fertilizer production capacity.

Financial year 2007-08 has seen unprecedented growth in the demand for fertilizers. The demand projected by DAC for the Kharif 2007season was for 131.68 lakh MT of urea, 40.08 lakh MT of DAP and 16.52 lakh MT of MOP. The demand was met fully and sales of 124.58 lakh MT of Urea, 36.14 lakh MT of DAP and 14.17 lakh MT of MOP were registered. Similarly, for the Rabi season of 2007-08, the demand projected by DAC was for 140.02 lakh MT of Urea, 49.13 lakh MT of DAP and 19.61 lakh MT of MOP. As per the current trends, the sale is likely to be 126.60 lakh MT of Urea, 41.59 lakh MT of DAP and 14.48 lakh MT of MOP.

Fertilizer is a key ingredient in ensuring the food security of the country by increasing the production and productivity of the soil. The domestic food grain production target has been set at 320 million tonnes by 2011-12 from the present production of 210 million tonnes. This target could be achieved by higher productivity through improved farming practices, expansion of irrigation, better seeds and extensive and balanced use of fertilizers. Towards this end, the Department is planning to raise the production of urea from the present installed capacity of 197 LMT to 300 LMT by the end of 11th Five Year Plan i.e., 2011-12 by taking concrete steps to boost production and productivity, removing regional imbalances in production and distribution, securing long term tie-ups for supply of feedstock and raw material etc.

Growth of Fertilizer Industry

As on 31 Jan 08, the country has an installed capacity of 120.61 lakh MT of nitrogen and 56.59 lakh MT of Phosphate. Presently, there are 56 large size fertilizer plants in the country manufacturing a wide range of nitrogenous, phosphatic and complex fertilizers. Out of these, 30 (as on date 28 are functioning) units produce urea, 21 units produce DAP and complex fertilizers, 5 units produce low analysis straight nitrogenous fertilizers and the remaining 9 manufacture ammonium sulphate as-product. Besides, there are about 72 medium and small-scale units in operation producing SSP. The sector-wise installed capacity is given in the table below:-

Sector -wise and Nutrient - wise Installed Capacity of Fertilizer Manufacturing Units (as on 1st January, 2008)

Technological Advancements

• To meet the demand of fertilizers in the country through indigenous production, self-reliance in design engineering and execution of fertilizer projects is very crucial. This requires a strong indigenous technological base in planning, development of process know-how, detailed engineering and expertise in project management and execution of projects. With the continuing support of the Government for research and development as well as for design engineering activities over the years, Indian consultancy organisations in the filed of fertilizers, Project and Development India Ltd. (PDIL) & FACT Engineering and Design Organisation (FEDO) have grown steadily in tandem with the fertilizer industry. These consultancy organisations are today in a position to undertake execution of fertilizer projects starting from concept/designing to commissioning of fertilizer plants in India and abroad.
  
  
• A concept has been developed to carry out research and development / basic research work by mutual understanding between industry and academic institutions, and the Department of Fertilizers has sponsored research and development projects through the Indian Institutes of Technology, Delhi and Kharagpur under the Science and Technology activity for the development of research / basic research in the filed of fertilizer Industry. Action to widen the sphere of research and development to encompass areas of fertilizer usage etc is also under consideration.
  
  
• The fertilizer plant operators have now fully absorbed and assimilated the latest technological developments, incorporating environmental friendly process technologies, and are in a position to operate and maintain the plants at their optimum levels without any foreign assistance and on international standards in terms of capacity utilization, specific energy consumption & pollution standards. The average performance of gas-based plants in the country today is amongst the best in the world.
  
  
• The fertilizer industry is also carrying out de-bottlenecking and energy saving schemes in their existing plants and to enhance the capacity and reduce the specific energy consumption per tonn of product. Companies are also planning to convert their existing Naptha- based fertilizer plants to Liquefied Natural Gas (LNG).
  
  
• The country has also developed expertise for fabrication and supply of major and critical equipment such as high-pressure vessels, static and rotating equipment, Distributed Control System (DCS), heat exchangers and hydrolyser for fertilizer projects. The indigenous vendors are now in a position to compete and secure orders for such equipment both in India & abroad under International Competitive Bidding (ICB) procedure. Presently, about 70% of the equipment required for a major domestic fertilizer plant are designed and manufactured indigenously.
  
  
• A significant development/advancement has also been made in the country in the field of manufacturing of catalysts of various ranges by our catalyst-manufacturing Organisation like PDIL. PDIL is implementing the schemes for enhancement of capacity and technological upgradation in their existing catalyst plant and other utilities at Sindri to compete in the International market.
  

Capacity Build-Up

At present, there are 56 large size fertilizer units in the country manufacturing a wide range of nitrogenous, phosphatic and complex fertilizers. Of these, 30 units ( as on date 28 units are functioning ) produce urea, 21 units produce DAP and complex fertilizers, 5 units produce low analysis straight nitrogenous fertilizers and 9 manufacture ammonium sulphate as by-product. Besides, there are about 72 small and medium scale units in operation producing single super phosphate (SSP). The total installed capacity of fertilizer production which was 119.60 lakh MT of nitrogen and 53.60 lakh MT of phosphate as on 31.03.2004, has marginally increased to 120.61 lakh MT of nitrogen and 56.59 lakh MT of phosphate as on 31.01.2008.

Production capacity and capacity utilization

The production of fertilizers during 2006-07 was 115.78 lakh MT of nitrogen and 45.17 lakh MT of phosphate. The production target for 2007- 2008 has been fixed at 119.08 lakh MT of
nitrogen and 49.14 lakh MT of phosphate, representing a growth rate of 2.85% in nitrogen
and 8.79% in phosphate, as compared to the actual production in 2006-2007.

Production target for nitrogenous fertilizer is less than the installed capacity because of constraints in supply and quality of natual gas for Rashtriya Chemicals & Fertilizers (RCF), Trombay and Bramaputra Valley Fertilizer Corporation Ltd. (BVFCL), Namrup. Similarly, the production target for phospahtic fertilizer is less than installed capacity due to constraints in
availability of raw materials/ intermediates which are largely imported.

Fertilizer Production in April 2008-June 2008

Strategy for Growth

The following strategy has been adopted to increase fertilizer production:

• Expansion and capacity addition/efficiency enhancement through retrofitting / revamping of existing fertilizer plants.
  
  
• Setting up joint venture projects in countries having abundant and cheaper raw material resources.
  
  
• Working out the possibility of using alternative sources like liquified natural gas, coal gasification, etc., to overcome the constraints in the domestic availability of cheap and clean feedstock, particularly for the production of urea.
  
  
• Revival of the closed units by setting up brownfield units subject to availability of gas.
  
  
• Setting up of Greenfield projects in urea sector.
  

Joint Ventures Abroad

The details of the existing joint ventures in the fertilizer sector are :-

Joint Venture Oman India Fertilizer Company, Oman (OMIFCO):

KRIBHCO, IFFCO and Oman Oil Company with a share holding of 25%, 25% and 50% respectively have collaborated and set up a world-class urea-ammonia fertilizer plant in Oman. It consists of 5060 MTPD granular Urea and 3500 MTPD Ammonia plants along with all other offsite and utilities in the coastal town of Sur in Oman. The annual capacity of the fertilizer complex is 16.52 lakh MT of granular Urea.

ICS Senegal

The Government of India (GOI), Indian Farmers Fertiliser Cooperative Ltd. (IFFCO) and Southern Petrochemicals Industries Corporation Ltd. (SPIC) are equity partners in a joint venture company set up in Senegal. The initial equity contribution of the Indian consortium in the venture in 1980 amounted to Rs. 13.67 crore, i.e. about 18.20% of its total equity. At present, the Indian sponsors together hold 27.28% equity (GOI-6.97%, IFFCO-19.09% and SPIC-1.13%), in the Joint Venture Company in Senegal named Industries Chimiques du Senegal (ICS).

JV with Jordan

SPIC, Jordan Phosphates Mines Company Ltd. (JPMC) and Arab Investment Company (AIC)
have set up a joint venture project in Jordan to produce 2.24 lakh tonnes of phosphoric acid
per annum. 52.17% of the equity of the joint venture named Indo Jordan Chemicals Company Limited is held by SPIC, 34.86% by JPMC and 12.97% by AIC. The plant had been
commissioned in May 1997. The Phosphoric Acid from this venture is supplied to SPIC and few other fertilizer units in India.


JV with Morocco

A Joint venture IMACID (Indo Moroc Phosphore SA) between Office Cherifien Des Phosphates (OCP), Morocco and Chambal Fertilizers & Chemicals Ltd. (CFCL) to produce 3.30 lakh tonnes of phosphoric acid per annum was commissioned in Morocco in October 1999. After completion of first phase of revamp / debottlenecking project during 2004, the capacity has been increased to 3.65 lakhs tonnes per annum. The equity of US$ 65 million in the venture was held by OCP & CFCL equally. Subsequently in May 2005, both OCP & CFCL have sold one-third of their equity stake in IMACID to TATA Chemicals Limited.

Overseas Joint ventures under implementation/consideration

JV in UAE

SPIC is in the process of setting up a gasbased nitrogenous fertilizer plant at Dubai in United Arab Emirates to produce 4.00 LMT of urea per annum at an estimated cost of US$ 170 million. The joint venture company by name SPIC Fertilisers and Chemicals Limited, incorporated in Mauritius is promoted by SPIC with equity participation of US $ 22.64 million
and Emirates Trading Agency of UAE with equity holding of US $ 6.4 million. The project is currently under discussion.

JV in Egypt

Indian Farmers Fertiliser Cooperative Ltd (IFFCO and El Nasr Mining Co. (ENMC) have
formed a Joint Venture Company, the ‘ Indo Egyptian Fertiliser Company’ on 15th November
2005 for setting up a Phosphoric Acid plant in Egypt with an installed capacity of 5,00,000 tonnes of P205 per annum. The estimated cost of the Project is US$ 325 million, which is expected to be financed with a debt: equity ratio of 67:33. IFFCO and its Affiliates would hold the majority equity shareholding of 76% while ENMC and Affiliates would hold the balance equity of 24% in the Joint Venture Company. ENMC, the largest Rock Phosphate Mining Company of Egypt will supply Rock Phosphate, the basic raw material of the Project and IFFCO will buy back the entire Phosphoric Acid production. The Project construction period is estimated at 36 months. While the financial closure of the project has been achieved, the construction of the project has not commenced due to delay in issuance of licence by the Egyptian Industrial Development Authority.

JV in Tunisia

Gujarat State Fertilizers & Chemicals Ltd (GSFC) and Coromandel Fertilizers Ltd (CFL) alongwith Group Chimique Tunisien (GCT) & M/s Compagnie Des Phosphates De Gafsa (CPG) are setting up a joint venture project in Tunisia for production of 3,60,000 MTs of Phosphoric Acid per annum. The name of the JV Company is M/s Tunisian Indian Fertilisers S.A. (TIFERT). The JV will sell its full production to both the Indian parties viz GSFC and CFL. An MOU to this effect was signed in October, 2005 between GSFC & GCT/CPG. The cost of the project is approx. US $ 165 million + 5% with equity of US$66 million and borrowings of US $99 million. The project is expected to be commissioned by mid 2009 or latest by December, 2009.

JV in Jordan

The Indian farmers Fertilizers Cooperative Ltd (IFFCO) and Jordan Phosphate Mining Company (JPMC) have agreed on a joint venture for setting up of a Phosphoric Acid plant in Jordan with an installed capacity of 5,00,000 tonnes of P205 per annum. The equity holding is 52:48 between IFFCO and JPMC, respectively. The financial closure and environmental closure are in progress and are likely to be achieved within May 08. The project construction period is estimated at 36 months thereafter.

Domestic Projects

Policy Environment

• No license is required for setting up a new fertilizer project or for expansion of capacity of existing fertilizer plants. Investments/projects in the fertilizer sector can be undertaken after filing the industrial Entrepreneur's Memorandum with the secretariat for Industrial Assistance(SIA) as per Industrial policy resolution of the Government dated 24th July, 1991.
  
  
• A prior clearance of the project site from environmental angle is, however, a statuary requirement.
  
  
• Any major public/cooperative Sector project for setting up new plants or for revamp/retrofit/expansion of existing plants are subject to investment approval of the Government through the Public investment Board etc., depending on the investment involved and the delegated financial powers available to each company.
  

Concessions/incentives on import of capital goods for fertilizer industry

To encourage investment in the fertilizer sector, the following concessions are available to the domestic industry:

• Concessional customs duty on import of capital goods for setting up of new plants/substantial expansion /renovation/modernization of existing plants.
  
  
• Deemed export benefit to indigenous suppliers of capital goods for new/revamp/retrofit/modernization projects of fertilizers projects of fertilizers provided such supplies are made under the procedure of International Competitive Bidding.

Information Technology

• IT Based Systems Towards Increasing Efficiency in Fertilizer Management
  
  
• Web Based Fertilizer Production Monitoring System
  
  
• Web Based Fertilizer Distribution and Movement Information System
  
  
• Web Based Fertilizer Concession Scheme Monitoring System
  
  
• Fertilizer Subsidy Payment Information System
  
  
• Application System for Monitoring Energy Consumption Norms
  
  
• Application System for Revision in Urea Concession Rates
  
  
• Fertilizer Equated Freight Fixation Information System
  
  
• Web Based Fertilizer Import Management System
  
  
• Web Based Handling & Payments System for Fertilizer Imports
  
  
• Fertilizer Project Monitoring System
  
  
• Information & Communication Technology (ICT)Infrastructure
  
  
• Web Site/ Web Applications Hosting
  
  
• IntraFERT Portal
  
  
• Fertilizer Monitoring System
  
  

Public Sector Undertakings

• Fertilizers And Chemicals Travancore Ltd.
  
  
• Fertilizer Corporation of India Ltd. (FCI)
  
  
• National Fertilizers Limited (NFL)
  
  
• Rashtriya Chemicals & Fertilizers Ltd. (RCF)
  
  
• Pyrites, Phosphates & Chemicals Limited (PPCL)
  
  
• Madras Fertilizers Limited (MFL)
  
  
• Projects & Development India Limited (PDIL)
  
  
• Hindustan Fertilizer Corporation Limited (HFC)
  
  
• Brahamaputra Valley Fertilizer Corporation Limited (BVFCL)
  
  
• FCI Aravali Gypsum And Minerals India Limited (FAGMIL)

Cooperative Sector

• Krishak Bharti Cooperative Limited (KRIBHCO)

Joint Sector Undertaking

• Indian Potash Limited (IPL)
  

Policy Framework

• Urea Pricing Policy
• Import-export policy
  

Related Web Links

Department of Fertilizers, Ministry of Chemicals and Fertilizers