Urea output drops to 18L tonnes from 24L due to West Asia conflict

NEW DELHI: Domestic urea manufacturing has been hit due to the West Asia crisis, with production falling to 18 lakh tonnes this month from the earlier average of 24 lakh tonnes. But the output is set to increase with greater availability of LNG, procured through “spot buying” every fortnight, officials have said.

The govt has maintained that there is an adequate stock of fertilisers and is tapping alternative sources to boost supplies, even as urea units that had taken annual maintenance shutdowns this month begin resuming production. Centre has also asked states to monitor any abnormal spike in sales of fertilisers in the “lean season” to prevent any stockpiling and black marketing, people aware of the development said. They said any such activity would attract stringent action, while adding that farmers need not panic as the availability of soil nutrients is adequate and these will be available at current prices.

Briefing the media on Monday, Aparna Sharma, additional secretary in the fertilisers department, said the current stock of soil nutrients at 180 lakh tonnes is 22 per cent higher than that of last year. On diversification of sources, she said a global tender for 13.1 lakh tonnes of urea has been floated, and long-term arrangements have been tied up with countries such as Saudi Arabia and Oman. In addition, the focus is on sourcing from other countries, including Russia, Morocco, Australia, Indonesia, Malaysia, Jordan, Canada, Algeria and Egypt.

On the impact of the conflict on the fertiliser sector, Sharma said the Gulf region accounted for about 20-30 per cent of India’s urea imports, 30 per cent of Diammonium Phosphate and 50% of LNG needs. The conflict has pushed up the cost of inputs such as LNG, ammonia and sulphur, besides raising freight expenses.

She added that notifications regarding gas supply allocation had impacted domestic urea production, resulting in a temporary output reduction of 30,000-35,000 tonnes per day. Following the notifications, the annual maintenance of some units was advanced.

Sharma said that at present, 27 urea plants are receiving gas supply, and the units that were under maintenance are now ready to resume operations. The government has procured “spot gas” to support domestic production, with LNG availability now at 75–80 per cent. Of the 52 million standard cubic metres per day of gas requirements of fertiliser plants, about 15 mmscd was being procured from the spot market.

Spot purchases have been made for $19.5-19.6 per million British thermal unit, as compared to a $11-12 per mmBtu rate in the pre-war period.

All these factors will push up the subsidy burden substantially, officials said.