In an exclusive interview with CNBC Awaaz's Lakshman Roy, Fertilizer Secretary Arun Singhal said there will be no shortage of fertilizers in the next season.
Here are the edited excerpts from the conversation:
Gas prices have come down after the new domestic natural gas pricing formula. Gas accounts for about 80 to 90 percent of the cost of urea production. So after this decision of the cabinet, how much will the cost of fertilizer be reduced? And will the government give the benefit of this reduced price to the farmers or use it to reduce the subsidy?
You are right. 80 to 85 percent of the cost of urea is the cost of gas. Domestic natural gas accounts for 10 percent. After the decision of the cabinet, the prices of domestic gas for the fertilizer sector will be reduced.
Along with this, the prices of imported gas have also come down considerably. The gas we are buying from the spot is currently being bought at $14 per MMBtu, which used to be 60 to 65 dollars a year ago. The international gas used to buy has also come down.
The cost of urea which we used to import has also been reduced. Last year, the subsidy on urea was about Rs 1,60,000 crore. This year we estimate that it will be around Rs 1 lakh crore. There will be a saving of about Rs 60,000 crore.
So, will there be no need for additional subsidy for current financial year?
I am hopeful that we can manage easily with Rs 1,75,000 crore, which has been allocated in the budget. Because in urea, I told you that there will be savings. The DAP prices, which had crossed the $900 mark have now come down to around $525. Similarly, the mop which cost $590 last year has now come down to $522. So, the prices of all the fertilizers have come down now.
Can we say that in terms of the cost of fertiliser imports, we have reached pre-Ukraine crisis level?
We are not quite back to that level, but we are about to reach that level. But in the meantime, India has adopted an important strategy that we no longer want to depend on any one country for fertilizer import. Now we have started taking fertilizers from different countries. We are talking to countries like Morocco, Egypt and Oman. In this way, when we will not depend on any one country for imports, we will not be affected much by the fluctuations in the prices in the international market.
What are the preparations so that there is no shortage of fertilizer in the next season?
We are fully prepared. Our assessment is that if we have stock up to 30 percent of the total requirement of the entire season before the season, then we think that there will be no problem. According to that, the requirement of 170 lakh metric tonnes of urea is estimated for this season. At present, we have a stock of 65 lakh MT. So, it is much more than 30 percent. Similarly, the requirement of DAP for the whole season is estimated at 55 lakh tonnes whereas we have 33 lakh tonnes i.e. 60 percent of DAP is available in godowns.
After nano urea, now nano DAP is about to enter the market. What is its roadmap?
Two companies of nano DAP have taken patents -- Coromandel International and IFFCO. Both have been approved by the Agriculture Department. But nano urea or nano DAP will not completely replace conventional urea and DAP. We are assuming that even if 25 percent replacement is done in the initial phase, it will be a great achievement. If 25 percent replacement is done in urea, then a subsidy of Rs 25,000 crore will be saved.
We believe that by 2025, the import of urea will be completely stopped. Because the use of nano urea is increasing. The capacity of the plant producing urea is increasing. New plants are coming up. By 2025, the new plant at Talcher will also start production. So by 2025, the production capacity of urea in the country will be 297 lakh MT.
Apart from this, we also produce beyond our capacity. If we mix everything, we will start producing about 330-340 lakh MT of urea. While our consumption is 350 lakh tonnes, if nano urea is also added, then we will be able to produce our entire requirement in the country itself. However, some import of DAP and other fertilizers will continue.
By when will the PM Pranam scheme, which was announced in the budget, be started?
Under the PM Pranam Yojana, if the state governments make farmers aware of fertilizers in a balanced way and this reduces the consumption of chemical fertilizers, then we will give 50 percent of the savings that will be made to the state governments. (We) will send this proposal to the cabinet soon. This will be implemented in the next one or two months.
And (Centre) will implement it from this year itself. The result of the savings that will be made in 2023-24 will be declared in the next year 2024-25.
Are you considering any changes in the existing system of direct benefit transfer in the fertilizer sector?
Right now, there is a network of 3 lakh posh machines. The company gets paid only when the fertilizer sack is sold. This has been a huge improvement. Now the question is whether farmers should be given as much fertilizer as the land they have. We haven't made this arrangement yet. Initially, we are considering running its pilot project. We had sought suggestions from the states for each district.
About eight states have sent these details. Right now, we are making changes in the software accordingly. Because land records will also be seen in it. Then start the pilot project. Based on the results of the pilot project, a decision will be taken to start it completely.
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