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Fixed cost escalation for urea units: When will industry get the money?. Matix in commissioning mode-I: Running a CBM field is not easy. Matix in commissioning mode-II: Working capital compensation only in April?. Ammonium Phosphate unit in Rajasthan: Hindustan Zinc says work is 'in progress'. Namrup's new avatar: Know a little more. The cost-economics of gas production in India: An analysis. GNFC: Project details. Briefs. SSP units coming up; Details. Zuari's NPK plans: Environment ministry tells company to seek fresh TOR. Modi promotes a scheme for integration of agricultural inputs and an e-commerce platform. Notional freight for DAP & NPK: Put in cold storage . Tata assets on sale-II: Adani rejects deal but others will line up . Talcher plant: Award of gasification contract put on hold. Tata assets on sale-I: Valuation will be much lower than the asking price. Alarm bells begin to ring on drying subsidy payments-II: Last year was a bad year, this year can be worse. Alarm bells begin to ring on drying subsidy payments-I: Money for urea will get over in July. As India wraps up purchases, urea prices are set to fall.

Fixed cost escalation for urea units: When will industry get the money?

July 5: The DOF seems to be going around in circles over the grant of Rs 350 per tonne of urea as fixed cost escalation as announced in a policy statement in April, 2014.
8To begin with the policy statement itself had holes in it: while promising to escalate the fixed cost by Rs 350 per tonne, it went on to obfuscate the issue by stateing that the government will "grant the minimum fixed cost of Rs. 2300/MT or actual fixed cost prevailing during 2012-13, whichever is lower, after taking into account the additional fixed cost".
8In other words, one interpretation of the policy by a section of the DOF was that even if there is a Rs 350 per tonne hilke, the total fixed cost would be restricted to just Rs 2300 per tonne or the actual fixed cost for 2012-13 which ever was lower 
8Will the industry gets its money? If so, when?
Click on Details to find out when

Matix in commissioning mode-I: Running a CBM field is not easy

July 5: The fertilizer industry is waiting with interest the commissioning of the fertilizer plant by Matix in Panagarh in the next couple of months
88This is the first standard capacity urea-ammonia plant to come up in the country in a long time.
8The curiosity comes from two reasons: one is the find out how exactly will the government deal with a non-grid connected plant in terms of pricing of gas, and the other is whether Essar`s Raniganj CBM field be able to supply the required 2.3 mmscmd of gas to the fertilizer plant.
8Pre-commissioning work in the unit has already begun and the company is claiming that urea in test quantities will indeed be manufactured starting August-September, 2014.
8But there are indeed quite a few challenges -- and most of it coming from problems arising out of the Raniganj field -- that the unit will face in the run up to commissioning and full operations slated for March-April, 2015.
8The 47-km pipeline from the Raniganj field to the fertilizer plant, for example, has not been completed and Essar has to step up CBM production very significantly before Matix can run at full capacity.
8A total of 250 wells have been drilled, and gather the gas into Gas Gathering Stations and the consequent high volume dewatering exercise is not a very easy job.
8A long time was spent in eliciting environmental clearances,, and now a battle is on to acquire more land.
Click on Details for much more on the issues connected with gas supply and connectivity to Matix and the attendant problems.

Matix in commissioning mode-II: Working capital compensation only in April?

July 5: Matix is beginning its pre-commissioning activities in August-September, 2015 and it is not know yet when commercial production will stat.
Since the gas pooling policy is meant only for grid connected urea units, the price of gas for Matix -- which is not connected to a main grid --  will be as per the domestic gas pricing formula, making the price of gas cheaper by half for Matix in comparison with other gas based urea unit.
The problem is that the company has to accumulate enough working capital if commercial production starts after August because the government will not be in a position to pay up for subsidies.
The bill will only be paid in April as the subsidy allocation for domestic urea is likely to be over by this month end, leaving the industry starved of funds till the next fiscal except for some meager amount that may come in through supplementary grants.
Given that Matix is already reeling under a debt burden, this will be additional debt it will have to handle.
8The advantage however will be that the working capital requirement will be lower than other gas based units, which will have to pay for gas at a pooled price of around $10/mmbtu.

Ammonium Phosphate unit in Rajasthan: Hindustan Zinc says work is "in progress"

July 5: Hindustan Zinc Ltd claims that the the greenfield Ammonium Phosphate (1670 TPD ) cum Phosphoric acid (900 TPD ) complex at Dewari Rajsthan is "in progress".
The projected cost is Rs 1500 Crore . 
A total power requirement of 27 MW will be sourced from the state grid through the Ajmer Vidyut Vitaran Nigam Limited (AVVNL), Rajasthan . 
The company will also have two DG sets with capacity of 2500 KVA each.
The primary raw materials for the proposed project are Sulphuric Acid, Rock Phosphate and Ammonia.
Sulphuric Acid produced in the Zinc Smelter at Debari in Rajasthan will be completely utilized and the shortfall will be sourced from the other zinc smelters of the company in Rajasthan.
Rock Phosphate requirement shall be sourced from the Rock Phosphate mine of Hindustan Zinc Limited, at Matoon in Rajasthan and the shortfall will be resourced from "international or  domestic markets".
Ammonia will be imported from international and domestic market as well.
All imports shall be preferably through the Kandla or Pipav ports
 Click on Reports for more

Namrup's new avatar: Know a little more

July 5: Brahmaputra Valley Fertilizer Corporation Ltd -- under a new avatar, now that the cabinet has sanctioned a brand new urea-ammonia complex -- will soon be floating a tender for a transactions advisor to work out the details of the arrangement under which a new JV will operate. The advisor will also help in the seeking of partnerships from its promoters in the public and the private sector.
A new boss is to be appointed too, and the government has advertised the post.
The RFQ for licensors will be a subsequent process, sources in the know told this website.
In the meanwhile the old and near-defunct Namrup fertilizer plants are going to continue to operate until the new unit comes up.
The transition structures have not been fully spelt out, but anyone who is interested and wants to know more, we are providing some details of the complex in our Reports section.
Namrup is yet another investment opportunity for a private company, even though the Board of Directors will be loaded with representatives from the state government and the public sector gas supplier, Oil India Ltd.
The structuring may eventually have to be finetuned if there is not enough interest from investors.
 Click on Reports for more.

The cost-economics of gas production in India: An analysis

July 2: The RIL-BP combine had at one point last year promised to get its gas output up to 50 mmscmd in the next 4 to 5 years from its current level of around 10 to 11 mmscmd of gas. This kind of output could have incubated many ammonia-urea projects in India, all based on domestic gas.
But for that to happen, the deepwater discoveries in the combine`s D-6 and NEC- 25 blocks will have to go on stream.
The condition however was that the discoveries can only be brought on stream if the price of gas is $10/mmbtu or more.
The group had claimed that there is still a massive quantity of gas -- between 5 to 7 TCF -- in the deepwater and ultra deepwaters of its E&P blocks.
The first of the projects lined up was the D-34 cluster of discoveries, which contains 1.2 TCF of gas, and first gas was expected by 2018. This development would have entailed an investment of $ 4 billion.
8The current price of gas is only half this level and therefore the combine has put its development plans on hold, as was announced by Niko, a 10% partner with the RIL-BP duo in the D-6 field, in a recent statement.

8What holds true for RIL and BP also applies for other players in the field such as ONGC and GSPC
8Clearly, this has implications for the fertilizer sector, for if the extra domestic gas does not get pumped in over the next few years, the dependency on LNG will go up, thereby skewing the cost economics of urea with respect to imported urea.
 Click on Details for a comprehensive analysis of the cost economics of gas production in India.

GNFC: Project details

July 2: GNFC has got a long list of fertilizer projects that are either under implementation or are under planning. The following are the details:
Under construction:
8DAP/NPK Train 4 at Sikka for 5 lakh tonnes
8Nylon-6 at Vadodara for 15000 tonnes
8Water soluble fertilizers at vadodara for 20000 tonnes 
Projects Under Consideration
At Sikka
8Phosphoric Acid 1.65 lakh tonnes
8Sulphuric Acid unit for 6 lakh tonnes
At Dahej
8Amonia:  7.26 lakh tonnes
8Urea: 10 lakh tonnes
8Caprolactam: 1 lakh tonnes
8Melamine: 40,000 tonnes
8MMA: 50,000 tonnes
8PMMA:  25,000 tonnes
8Nylon 6: 30,000 tonnes
At Vadodara
8Melamine:  40,000 tonnes
Comment: There is no mo movement so far in the urea-ammonia plant as the company is currently studying the new policies in the sector. As for  the others, they in various stages of planning, company sources told this website     


July 2: 8Crop advisories by Maharashtra and Andhra Pradesh
Crop advisories from state governments on what to do in case of deficient rainfall have implications for the fertilizer industry. For reference purposes, the website carries in its Reports sections the advisories sent out recently by Maharashtra and Andhra Pradesh.
8Impact on El-Nino on Indian agriculture
A paper dubbed "EL-Nino and Monsoons: Impact on India and the World" by HDFC Bank claims that the El Nino effect is overstated in Indian agriculture and that impact on actual rainfall is lower than what it is thought to be.
8Review of ongoing dryland and rainfed farming with an introduction by Narendra Modi
The website carries here a critical review of the ongoing dryland and rainfed farming and watershed development programme by central ministries with an introduction by none other than Narendra
Modi, who was then the chief minister of Gujarat. The comprehensive review has implications for the fertilizer sector.
8Minimum Support Price for Kharif
For reference purposes, the website carries here the full press note on Minimum Support Prices for Kharif Crops for 2015-16 season
8Monsoon Preparedness
The website carries here a paper on Monsoon Preparedness prepared by the Indian Institute of Water Management for reference of our readers
8FAI seminars
The 14th Fertilizer Industry Orientation Programmer for non-fertilizer executives will take place on 08-10 July, 2015, New Delhi.
FAI is also holding a two-day conference beginning August 21-22 on "Materials of construction for chemical process plants" in New Delhi.
Click on Reports for more Details

SSP units coming up; Details

July 2: Dhanlaxmi Bio-chem Pvt. Ltd is planning to set up a greenfield SSP and GSSP unit with a capacity 650 TPD each at Ahmedabad Gujarat .The projected cost is 25 crore .
Power requirement for the project is about 1.4 MW, which will be sourced from Uttar Gujarat Vij Corporation Limited (UGVCL).
8A 200 KVA DG set will be provided on site for power backup, Rock Phosphate of + 4 mm to + 15 mm size will be sourced either from Rajasthan or from other sources like Jordan, Egypt, Morocco, Togo, Syria. The sulphuric acid will be brought in from outside.
8Project proponent has already obtained an NOC rfrom GSPCB for GSSP. Currently the company is awaiting clearance only for SSP from SEAC/SEIAA Gujarat.
BEC Fertilizers Ltd
proposes to expand the capacity of its Pulgaon SSP unit in Maharasthra  by raising its sulphuric acid capacity from 110 TPD to 170 TPD and SSP from 220 TPD to 500 TPD.
8The company also plans to raise its granulated NPK fertilizer capacity from 200 TPD to 670 TPD.
8The projected cost is  Rs 10 crore. The existing power requirement of the complex will go up from 0.7 MW to 3.2 MW and will be sourced from the Maharastra State Electricity Board.

Zuari's NPK plans: Environment ministry tells company to seek fresh TOR

July 2: The environment ministry has sought a fresh Terms of Reference for Zuari Agro Chemicals Ltd's (ZACL) proposed 30 TPH Fertilizer Blending Unit for Customized NPK Production, along with a 25 MW power plant on the ground that company had carried out a second amendment in the project configuration, requiring a fresh TOR.
The TOR was initially granted for a lower capacity and now that a higher capacity plant is sought to be set up, the environment ministry has said that this cannot be done by amending the TOR but by a fresh TOR.
The following facilities are being sought to be built by SZuari
--(37 Kg/Cm2g) Gas Turbine (GT)
--Unfired capacity of 50 MT/Hr. (70 MT/Hr. with supplementary firing) Heat Recovery Steam Generator (HRSG) .
--1X5000 MT Atmospheric Ammonia Storage Tank .
--Urea Granulation Plant (expansion of Urea production from 1500 MTPD to 1800 MTPD.
--Urea Prilling: 1200 MTPD+ Urea Granulation Unit: 600 MTPD).

Modi promotes a scheme for integration of agricultural inputs and an e-commerce platform

July 2: The Modi government has today taken some decisions that have implications for the agricultural sector, and eventually have an impact on the fertilizer industry as well. The results are likely to show only towards the end of the government`s tenure, and if successful the Prime Minister can get electoral mileage from it.
8The CCEA has approved what is being termed as the "Pradhan Mantri Krishi Sinchayee Yojana" (PMKSY) with an outlay of Rs. 50,000 crore over a period of five years (2015-16 to 2019-20). The allocation for the current financial year is Rs. 5300 crore.
8The idea is to achieve convergence of investments in irrigation at the field level, expand cultivable area under assured irrigation (Har Khet ko pani), improve on-farm water use efficiency to reduce wastage of water, enhance the adoption of precision-irrigation and other water saving technologies (More crop per drop), enhance recharge of aquifers and introduce sustainable water conservation practices by exploring the feasibility of reusing treated municipal based water for peri-urban agriculture and attract greater private investment in precision irrigation system.
Creation of a all India e-platform for agricultural products
8Another laudable scheme that was introduced was to create a National Agricultural Market through an Agri-Tech Infrastructure Fund (ATIF).   The Department of Agriculture & Cooperation (DAC) will set it up through the Small Farmers Agribusiness Consortium (SFAC) a common electronic platform deployable in selected regulated markets across the country.   
8An amount of Rs. 200 crore has been earmarked for the scheme from 2015-16 to 2017-18.   This  includes provision for supplying software free of cost by DAC to the States and Union Territories (UTs) and for cost of related hardware/infrastructure to be subsidized by the Government of India up to Rs. 30 lakh per Mandi (other than for private mandis).
8The SFAC will implement the national e-platform in three phases during 2015-16, 2016-17 and 2017-18.  DAC will meet expenses on software and its customisation for the States and provide it free of cost to the States and UTs.  DAC will also give grant as one time fixed cost subject to the ceiling of Rs.30 lakh per Mandi  for related equipment / infrastructure in the 585 regulated mandis, for installation of the e-market platform.    Big private mandis will also be allowed access to the e-platform for purposes of price discovery.   However they will not be supported with any funds for equipment / infrastructure.
8But the platform will be implemented only in those states wwhich will undertake prior reforms in respect of (i) a single license to be valid across the state, (ii) single point levy of market fee and (iii) provision for electronic auction as a mode for price discovery. Only those States/UTs that have completed these three pre-requisites will be eligible for assistance under the scheme.
Neem coated fertilizers
8The government has also now made it mandatory for urea units to produce 100% production of their production in the neem coated format. Nutrient use efficiency of neem coated urea is about 5-10% higher than that of plain urea and, therefore, its use will economize the quantity of urea required by crops. Besides, coating of neem oil will also reduce the leaching of nitrates into the ground water and thus, help in reducing its
, a government press release said today.
Click on Reports for more

Notional freight for DAP & NPK: Put in cold storage

July 1: Well placed sources have now confirmed that the idea of lumping freight subsidy with the product subsidy for decontrolled fertilizers has now been put on permanent hold.
"The proposal was pushed by the earlier secretary because he saw simplicity and value in it and now that he is not there, the idea seems to have been put in cold storage," a DOF official told this website.
8Given that there are too many complaints on the package, the DOF it seems is happier doing without it, for otherwise if the idea misfires and fertilizer availability drops in places away from ports or factories, the blame will come on the department, the official said.

July 1: Tata assets on sale-II: Adani rejects deal but others will line up   Details
July 1: Talcher plant: Award of gasification contract put on hold   Details
July 1: Tata assets on sale-I: Valuation will be much lower than the asking price   Details
June 30: Alarm bells begin to ring on drying subsidy payments-II: Last year was a bad year, this year can be worse
June 30: Alarm bells begin to ring on drying subsidy payments-I: Money for urea will get over in July
June 30: As India wraps up purchases, urea prices are set to fall   Details
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