A Parliamentary panel today pulled up the government for increase in retail prices of phosphatic and potassic (P&K) fertilisers and suggested augmenting the production of low-cost indigenous fertilisers.

It also expressed regret over slow progress made in conversion of three urea units – MFL-Manali, MCFL-Mangalore and SPIC-Tuticorn - from naphtha to gas-based feedstock due to delay in commissioning of the gas pipline connectivity.

“The fact remains that the prices of P&K fertilisers have gone up sharply under the Nutrient Based Subsidy (NBS) regime which is one of the reasons for unbalanced use of fertilisers,” the Parliamentary Standing Committee on Chemicals and Fertilisers said in its 16th report submitted to the Lok Sabha today.

The retail prices of fertilisers fixed by the companies are also on higher side. Due to high prices, farmers are using less costly urea in place of P&K fertilisers, it said.

“The committee, therefore, of the strong view that the Fertiliser Department being the nodal authority, cannot simply ignore its responsibility to ensure supply of fertilisers to farmers at affordable prices and also its balanced utilisation by farmers in order to check degradation of soil,” the panel said in the report.

It suggested the government to augment the production of low-cost indigenous fertilisers and thereby restrict or reduce the subsidies, it added.

The panel, which had recommended the Fertiliser Ministry to reduce subsidy bill, said that it was not convinced of the ministry’s view that non-plan expenditure can be reduced only by slashing subsidy rate of P&K fertilisers.

Under NBS policy, retail prices of P&K fertilisers are fixed by the companies, while the government gives a fixed subsidy based on nutrient content taking into account global prices and exchange rate.

For the current fiscal, the subsidy rate for Diammonium phosphate (DAP) has been fixed at Rs 12,350 per tonne, while it is Rs 9,300 for Muriate of Potash (MOP).

Stating that gas supply is a major limiting factor to the growth of the urea industry, the panel said it is “regret to note that the process of conversion of three units is held up due to delay in commissioning of the gas pipeline connectivity.”

It asked the Fertiliser Ministry to take “proactive role” and impress upon the authorities concerned to expedite the work in a fixed time frame.

The committee also suggested the ministry to expedite working out a pricing mechanism to supply naphtha at a subsidised rate to non-gas based urea units.

India is the world’s third largest fertiliser producer with an installed capacity of 12.76 million tonnes of nitrogen, 6.2 million tonnes of phosphatic nutrients. However, the indigenous production of fertilisers has not increased to meet the growing demand.

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