Government throws lifeline for three urea plants in southern India

NEW DELHI: At a time when there was a perception that PSUs won’t receive support from government, the Narendra Modi government on Wednesday infused fresh life into three urea plants based in southern states, one of them state-owned. Last month government had approved the revival of a closed urea plant in Sindri in Jharkhand with an investment of Rs 6,000 crore.
In the past few months, government has taken steps to increase domestic production of urea to reduce dependence on imports.It is also making 100% neem coating mandatory for urea – both domestic and imported – to stop illegal diversion of highly subsidized fertilizer and reduce their wastage. The government is moving on ensuring supply of urea as well as reviving plants to ensure that the farm sector does not suffer from any shortage at a time when there is concern over deficient monsoon rains.
It is also aimed at getting industries onstream and help the manufacturing sector at a time when there are doubts over the land acquisition law.
The UPA government had announced closure of the three urea plants - Madras Fertilizers Ltd (MFL)in Manali, Mangalore Chemical and Fertilizers Ltd (MCFL) in Mangalore and Southern Petrochemicals Industries Corporation (SPIC) in Tuticorin.
But the cabinet committee on economic affairs (CCEA) approved the continuation of production of urea using naphtha as feedstock till availability of gas through a gas pipeline or by any other means. These three plants will ensure smooth supply of urea in the region as the three plants are expected to supply about 15 lakh tonnes.
“The decision has been taken to ensure smooth supply of fertilizer in the southern states. The total requirement of Karnataka, Tamil Nadu and Kerala is 23 lakh tonne (LT) and the annual production of these three units is 15 LT per annum,” fertilizer minister Ananth Kumar said.
“Our focus is to ensure that farmers get enough urea and there should not be any crisis at any cost. The decision to continue production of the three plants will go in favour of farmers, thousands of employees working at these facilities and to minimize our import demand,” said a ministry official.
At present, there are only two urea units at Kakinada in the entire southern region covering Andhra Pradesh, Telangana, Tamil Nadu, Kerala and Karnataka other than these three units. “If these three units would have been closed, then the entire requirement of the southern region would have had to be sourced mainly through imports. Continuation of operation of these three units would substantially ease the problems of urea supply in southern states during the ensuing kharif season,” a government release said.
Of the three companies, MFL is state owned while other two - MCFL and SPIC - are private players.