The Hindu Business Line : Fertiliser PSUs plan joint venture for global operations

New strategy
Three companies to set up joint venture.
To handle import of fertilisers and raw materials.
New company to explore setting up joint ventures with foreign cos.

New Delhi , March 26

In a bid to put an end to the perpetual shortage of fertilisers, the Government is planning to replicate the ONGC Videsh model in the fertiliser sector.

According to a proposal mooted by the Minister for Fertilisers, Chemicals and Steel, Mr Ram Vilas Paswan, three fertiliser manufacturers controlled by the Government — Krishak Bharati Cooperative Ltd (Kribhco), National Fertilisers Ltd (NFL) and Rashtriya Chemicals and Fertilisers Ltd (RCFL) will form a joint venture company.

This joint venture will undertake multi-faceted activities abroad with the objective of increasing fertiliser availability, raw material availability, check subsidy bill and exercise a sort of control over private sector fertiliser producers through competition.

The joint venture company will handle import of fertilisers as well as import of raw materials. The company will also explore possibilities of setting up joint venture companies with foreign companies for mining of rock phosphate, potassium and sulphur. As of now the fertiliser sector is faced with severe shortage of raw materials such as rock phosphate, phosphoric acid, sulphur and ammonia. Apart from these, every year the country imports all the three main fertilisers, namely urea, di-ammonium phosphate (DAP) and muriate of potash (MoP).

Although domestic production capacity is adequate to meet the total demand, import becomes necessary because the producers are unable to utilise their full capacity because of non-availability of raw material arising out of delay on the part of the Government to decide on the subsidy quantum. As shortage increases, imports increase and with India being one of the largest consumers, international prices go up as soon as India enters the market.

According to Government sources, it is primarily to get out of this vicious cycle that the joint venture company is being planned. Currently, discussions are on within the Fertiliser Ministry and comments from a few other Ministries have been sought.

This company, sources said, would also enable the Government to get a direct picture of international trends as it has been found that on some occasions fertiliser producers have not furnished the full picture about imports of raw materials in order to hide their inefficiencies.