The Center took all measures to ensure the availability of fertilizers during the ensuing Rabi season, in a context of soaring commodity prices and shortages.
The Fertilizer Department is closely monitoring the situation and reviewing weekly, as emerging conditions have resulted in increased production costs for all PSU fertilizer companies. The rising cost of raw materials has allowed the government to increase subsidies to all fertilizer companies to prevent further product price hikes, said Kishore Rungta, president and CEO of FACT. Business line.
The prices of all raw materials such as phosphoric acid, sulfuric acid, sulfur doubled last year, forcing companies to sell their products at lower margins or at a loss. However, the increase in subsidies to the tune of 8,000 yen per tonne for NPK and 12,000 yen for DAP has been a relief for manufacturers, he said.
Demand for Rabi season fertilizer in the country is estimated at 21 million tonnes compared to 20 million tonnes last year.
Rungta, who is also president of the Fertilizer Association of India (South Zone), said the way commodity prices are moving is a concern as the country cannot afford such a high price regime. . He attributed the increase in fertilizer consumption in China and Brazil, forcing global fertilizer manufacturers to focus on these countries. Global companies in Gulf countries Morocco allocate comparatively smaller quantities to India due to price parity. This, along with the rising cost of boat rentals, also adds to the woes of domestic manufacturing companies.
FACT has also prepared to import 1.5 lakh tonnes of MoP / NPKS from November, once the situation in the world market improves, he said.
Peak price of natural gas
Asked about the recent surge in natural gas prices, the CMD said. “We were isolated until August 2022 due to the contract signed with the PSU oil companies on the basis of the price of Gorgon gas which prevails at 12-13 / MMBtu, below international tariffs”. He said that even the price of existing gas is almost double the rate used at $ 6 / MMBtu last year.
FACT, he said, is in the final stages of expanding capacity by adding 0.5 million tonnes to the current million tonnes over the next two years. The project would involve setting up a new factory to produce various grades of fertilizer, including DAP. Once it goes live, he said revenue will reach around 7,000 crore from the current 3,200 crore in 2020-2021.
When asked about FACT’s ‘Looking East’ initiative, Rungta said that “there was an overwhelming response from Bengal and Odisha when shipping 20,000 tonnes of Factamfos and Ammonium Sulfate. . The intention is to opt for a pan-Indian footprint before opting for an expansion of capacity ”.