Policy reversal to hurt fertiliser sector, says Chander

Ahead of the Empowered Group of Minister (EGoM) meeting on considering revision in the existing gas allocation policy, the Fertiliser Association of India (FAI) has expressed concerns on the same.

Satish Chander, director general, FAI in an interview to CNBC-TV18 said there are reports that gas supplies to Rashtriya Chemical Fertilisers, Deepak Fertilisers will be impacted, but he sees no reason as to why the government should make any changes in the existing rules.
Chander says the government had introduced natural gas allocation policies to reduce the gap between demand and supply fertilizers, which to an extent helped the sector. But now, if there is any reversal in the policy, the demand-supply gap would widen leading to lower investments in the sector.
It may be recalled that the oil ministry had proposed changes in the current policy after KG-D6 gas output has fallen to 35 million cubic meters per  (mmcmd) after touching a peak of 60 mmcmd in March last year.
The empowered battery of ministers are likely to decide today on suspending gas supplies to power producers that do not sell electricity at regulated tariff. There is a possibility that the EGoM might propose to make future gas allocations to only urea fertiliser plants and fuel supply to phosphates and potassium fertiliser producers could be stopped.
Natural gas demand for fertiliser units in the country could increase to 113mmscmd in FY17 from the current mmscmd. However, the availability of natural gas is unlikely to increase in the near term. The government has assigned priority to gas allocation to the fertiliser sector, but a reduction in the gas output from a major source in the KG Basin makes it a difficult proposition, he says. Tune in to the accompanying video for more updates