Government plans a power boost for fertilizer production

Government plans a power boost for fertilizer production
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First Published: Wed, May 21 2008. 12 06 AM IST
Updated: Wed, May 21 2008. 12 06 AM IST
New Delhi: In a bid to reduce carbon dioxide emissions from coal-fired power projects and increase India’s fertilizer production, the government is exploring the idea of setting up integrated power and fertilizer complexes.
The plan is to use the carbon dioxide emitted from power plants and treat it with ammonia to manufacture urea.
“We are exploring this possibility since there is an immense need for both power and fertilizer in this country... the plan is, however, at a very preliminary stage,” said a senior government official who did not want to be identified.
With India producing around 67% of its electricity by burning coal, the power sector is the biggest consumer of the fuel, absorbing nearly 78% of its production.
The demand for coal is expected to grow rapidly as India seeks to add 78,577MW of generating capacity in the next five years. India currently has 143,000MW of generating capacity.
This latest move is expected to cut the dependence on imported urea, thereby reducing the government’s outgo on subsidy.
India currently imports about 17%, or 4 million tonnes, of its annual urea consumption. The country is expected to import 10 million tonnes per annum (mtpa) of urea by 2011-12; the total cash outgo on fertilizer subsidy during 2007-08 was Rs45,501 crore, which includes the bonds issued to fertilizer companies.
All this follows the government’s plans to set up fertilizer units in West Asia and Africa, either on its own or through partnership with private or cooperative sector fertilizer companies, as reported by Mint on 24 May 2007.
However, industry experts are not really convinced.
“Any fertilizer plant making urea gets its carbon dioxide requirement from the plant itself. I do not know how excess carbon dioxide from power plants will help in increasing production. The real problem in producing urea is making ammonia. Around 80% of the production costs are spent on producing ammonia and the rest is spent on converting it into urea,” a senior official at the Fertilizer Association ofIndia, an industry body, who did not want to be identified, said.
A senior NTPC Ltd executive also shared this view, noting the technology available is still at the exploratory stage.
Currently, several companies are exploring various means to produce urea.
State-run gas pipeline infrastructure firm GAIL (India) Ltd is planning an integrated ammonia and urea plant, which will use gas obtained from coal gasification, with Rashtriya Chemicals and Fertilizers Ltd in a Rs2,400 crore joint venture at Talcher in Orissa. It will have the capacity to produce 1mtpa of urea.
A typical bag of urea sells for Rs150, but only after the government gives the producer Rs100 in subsidy. Rising costs of raw materials such as fuel oil, coal, naphtha and gas—used as feedstock for producing urea—are further complicating matters.
Udit Misra contributed to this story.
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First Published: Wed, May 21 2008. 12 06 AM IST