A worker operates an excavator to move urea fertilizers inside a warehouse at the Kirshnapatnam Co. port in Kirshnapatnam, Andhra Pradesh, India (Photographer: Prashanth Vishwanathan/Bloomberg)

Government Reviving Five Closed Fertiliser Plants At A Cost Of Rs 37,971 Crore

Five closed fertiliser plants are being revived at an estimated cost of Rs 37,971 crore as the government looks to reduce urea imports, Union minister DV Sadananda Gowda said.

India produces around 241 lakh metric tonnes of urea while consumption is about 305 LMT. The shortfall is met through imports. The government fixes the maximum retail price of urea and manufacturers are compensated by way of subsidies.

During the Question Hour in the Lok Sabha, Gowda emphasised there is no scarcity of fertilisers across the country and that the government wants to reduce the use of fertilisers, including urea. The government is reviving five closed fertiliser plants of the Fertiliser Corporation of India, and Hindustan Fertiliser Corporation Ltd. These are the FCIL plants at Talcher (Odisha), Ramagundam (Andhra Pradesh), Gorakhpur (Uttar Pradesh), Sindri (Jharkhand) and HFCL's plant at Barauni (Bihar).

These plants are being revived by setting up new ammonia urea plants each having a production capacity of 12.7 LMT per annum. Subsequent to commissioning of these plants, the indigenous urea production would rise by 63.5 LMT per year and reduce urea imports, Gowda said. "The construction of the plants at each of the location is going on at full swing, the estimated cost of all the five plants is Rs 37,971 crore," the Minister of Chemicals and Fertilisers said.

Noting that the government is proposing to reduce urea imports, Gowda said the average total production of urea in the country was around 241 lakh metric tonnes in the last three years while the total consumption was about 305.48 LMT during the same period. "The gap is fulfilled through imports. In the last three years, average imported urea is 63.12 LMT and average expenditure is Rs 12,797.31 crore," he said.

In 2018-19, the budget allocation for fertiliser subsidies was Rs 73,435.21 crore. "In the year 2018-19, out of total expenditure of Rs 73,435.21 crore, only Rs 16,020.37 crore was spent to settle the dues from previous year," Gowda said. He noted that whenever there is a shortage of funds, the government liquidates the pending subsidy by arranging loans under a Special Banking Arrangement.

Bloomberg Quint

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