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Fertiliser Minister Mansukh Mandavia on Wednesday said the availability of domestically produced natural gas for the fertiliser sector declined considerably forcing urea manufacturing units to purchase costly gas from spot markets.
Speaking to reporters, Mandavia said the availability of domestically produced natural gas for fertiliser companies, for making urea, has come down to 8 million standard cubic meters (MSCM) from around 30 MSCM earlier.
As companies are forced to buy costly gas from international spot markets, the cost of producing urea is increasing. Gas accounts for 80 per cent of manufacturing costs, the Minister pointed out, this is leading to an increase in the subsidy burden. Fertiliser subsidy in FY23 will reach ₹2.25 lakh crore from ₹1.05 lakh crore BE.
According to the Petroleum Planning and Analysis Cell (PPAC), the fertiliser industry consumed 493 MSCM domestic natural gas and 1,181 MSCM of R-LNG (Regasified Liquefied Natural Gas). India imports gas as LNG, which accounts for 50 per cent of its overall domestic requirement.
During H1 FY23, industry’s domestic gas consumption stood at 2,743 MSCM, while R-LNG consumption was 7,203 MSCM, on a provisional basis. In FY22, fertiliser makers consumed 5,716 MSCM of domestic gas and 12,363 MSCM of R-LNG.
The availability of domestic gas for sale during September 2022 was 4,711 MSCM, a decline of 9 per cent y-o-y, while the total consumption during the month was 4,669 MSCM with fertiliser sector accounting for 36 per cent share.
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