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Phalguna Jandhyala
Richa Mishra

New Delhi, Dec. 18 Reliance Industries Ltd’s (RIL) plan to foray into the fertiliser sector is dependent on the yet-to-be finalised New Fertiliser Investment Policy. Official sources said that the company’s proposal would be considered only after the new Policy is in place.

Under the proposed policy, the Government plans to allow setting up of privately-owned plants that will not be bound by current price controls. The private companies would be given a free hand without any Government interference.

The policy also proposes to allow the producer to fix the price for the new units at which they want to sell the products. However, the domestic fertiliser prices for the farmers will continue to be regulated and determined by the Government.

Recently, the Union Minister for Steel, Chemicals and Fertilisers, Mr Ram Vilas Paswan, said that the new draft policy is ready and will put it up before the Cabinet some time in January 2008. According to him, the new policy would be benchmarked to international standards and will encourage healthy competition and efficiency both in production and distribution.

Earlier this year, RIL had submitted a proposal to the Ministry of Chemicals and Fertilisers to set up manufacturing plants having up to four million tonnes capacity. The company had proposed to use gas from its Krishna Godavari (KG) block. This move of RIL came at a point when the company was facing opposition from power and fertiliser companies over its proposed gas price for the KG find. RIL had proposed to set up its unit in Andhra Pradesh.

The fertiliser and power companies were opposed to RIL’s proposal to price the gas at the delivery point (Kakinada) at $4.33 per mBtu. However, after consideration by a high-level panel, the Government has approved the pricing formula for the gas to be produced by the company, pegging the gas price at $4.2 per mBtu at delivery point.

The fertiliser sector — which is looking at enhancing production capacity in its existing units, reviving closed fertiliser units and conversion of non-gas based fertiliser plants to gas — has projected a requirement of gas during the Eleventh Plan from 41.02 million standard cubic metre per day (MMSCMD) in 2007-08 to 79.36 MMSCMD in 2011-12. Currently, there are nearly 57 fertiliser plants in the country.

More Stories on : Fertilisers | Diversification | Policy | Reliance Industries Ltd

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