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Availability and pricing of fuel remains a major issue in India

india Updated: Mar 11, 2012 23:47 IST

Rashtriya Chemicals and Fertilisers Limited (RCF), is a leading fertiliser and chemical manufacturing company with about 92% of its equity held by the central government. It's chairman and managing director RG Rajan spoke to Hindustan Times on a range of issues. Excerpts:

What has been the contribution of RCF towards fertiliser growth in India?
RCF is one of the earliest units set up in country with a vision of growth of fertiliser production for food security. The company is a household name in rural India with brands "Ujjwala" (urea) and "Suphala" (complex fertilisers) which carry a high brand equity. RCF has countrywide marketing network in all major states. Besides Urea and Complex fertilisers, RCF also produces bio-fertilisers (Biola), micronutrients (Microla) and 100% water soluble fertilisers (Sujala). Apart from these products, RCF produces almost twenty industrial chemicals that are important for the manufacture of dyes, leather, pharmaceuticals, among others.

What have been the thrust areas for RCF in recent times?
Our most recent thrust areas include revamping of the existing plants to bring down energy consumption, improve production of fertilisers and achieve reliability in operations and safety. We have almost completed the revamp of our Thal ammonia plant which will augment the production of urea from 1.7 million MT to 2.0 million MT per year. Almost all the plants at Trombay have been revamped. During 2012-13, we also plan to structurally strengthen the Suphala plant which should give us more reliability.

Can you elaborate on the expansion plans of the company?
RCF is pursuing a number of expansion schemes within as well as outside the country. The company is planning the third phase of expansion of Thal unit by setting up Ammonia-Urea plants to produce 1.3 million MT urea at an estimated cost of Rs 4000 crore. Bids have already been received. Under the scheme of revival of FCI sick unit at Talcher, RCF in consortium with Coal India is actively pursuing to set up a 1.15-million MT urea manufacturing facility through coal gasification route.

How acute is the problem of availability of natural gas feedstock for RCF plants?
Being the most important feedstock, gas accounts for about 70% of the cost of urea production. Availability and pricing of the fuel remains a major issue in India. Production of gas at RIL's D6 block in the Krishna Godavari basin has declined to 38 mmscmd now from the peak of 62 mmscmd and it may further get reduced in the years ahead. The government gave fertiliser companies top priority in KG-D6 gas allocation but the fall in production started affecting supplies. RCF needs around 4.77 mmscmd gas for its Thal unit and around 2.13 mmscmd for the Trombay unit. RCF is allocated around 0.95 mmscmd and 2.1 mmscmd gas from KG-D6 for its Trombay and Thal units respectively. So far, the company has not faced any significant cut in the supplies from KG-D6. But our requirement has gone up. In addition to APM gas, RCF also draws gas from western offshore fields of state-owned ONGC from where 0.45 mmscmd gas has been allocated to the company. The shortfall in gas requirement is being met through regassified LNG at an exorbitantly high cost of around $16-$18 per mmBtu. This is one reason why we are looking for alternative source of feedstock other than gas for our future projects.