Naphtha Based Fertilizer Plants

The Government has not given any assurance to the Naphtha based urea/ other fertilizer manufacturing plants that these plants/ would not be closed down. As per the Modified New Pricing Scheme (NPS)-III for existing urea units notified on 2ndApril, 2014, “the production of the high cost naphtha based urea units namely Southern Petro-chemicals Industries Corporation (SPIC) -Tuticorin, Madras Fertilizers Limited (MFL)-Manali and Mangalore Chemicals and Fertilizers Limited (MCFL)-Mangalore was to continue till the gas availability and connectivity is provided to these units or June, 2014 whichever is earlier, beyond which subsidy for naphtha based plants was not be paid.

The Cabinet Committee on Economic Affairs (CCEA), in its meeting on 27th August 2014, approved the operations of these three Naphtha based urea plants in the southern states, from 1st July 2014 to 30th September 2014 and subsequently in its meeting on 10th December, 2014 for 100 days from date of notification of its decision i.e. 7th January 2015. The CCEA Note for continuation of these three naphtha based urea units beyond 16th April, 2015 has been approved by the competent authority and will be sent to the CCEA after inter-ministerial consultations.

As directed by the CCEA in its meeting 10th December 2014, the Department of Fertilizers convened a meeting of all stakeholders to explore the other alternatives to supply gas to these Naphtha based urea manufacturing units and also review the status of conversion of these three naphtha based urea manufacturing units, availability of gas and gas pipeline connectivity on 09th March, 2015.

In view of analysis carried out by Department of Fertilizers, operation of these three plants on gas supply through Floating Storage & Regasification Unit (FSRU)/ gas tankers is technically not feasible. The commencement of supply by tankers and FSRU needs at least 24 months period after getting all necessary clearances. So gas supply through pipeline is the best option.

At present, MCFL-Mangalore and SPIC-Tuticorin are continuing urea production using naphtha as feedstock as per the direction of Hon’ble High Court of Delhi. However, MFL-Manali has shut down their plant from 17th April, 2015.

This information was given by the Minister of State for Chemicals & Fertilizers Shri Hansraj Gangaram Ahir in reply to an Unstarred Question in the Lok Sabha today.