The Fertiliser Ministry has approved import of about 1.6 million tonnes (mt) of urea, estimated to cost $1.5 billion (nearly ₹11,500 crore) and it would be shipped in by Indian Potash Ltd (IPL) on government account to help improve domestic supplies.

Of the total import, about 1 mt will arrive at ports on the West Coast while 0.6 mt will be on the East Coast, a Fertiliser Ministry official said. As many as 15 companies have signed contract for the urea supply after the government’s approval, the official said.

The maximum quantity of 0.9 mt has been contracted at $981.64/tonne, while another 0.6 mt will come at $998.5, sources said, adding a small quantity of less than a lakh tonne would be imported at about $960/tonne (all cost and freight basis).

Canalising agencies

On November 3, while notifying IPL and National Fertiliser Ltd (NFL) as canalising agencies for import of urea on behalf of government, the government has also removed public sector MMTC and STC. Rashtriya Chemicals and Fertilizers (RCF) continues to be a canalising agency. Since the maximum retail price of urea is fixed and the government bears the entire subsidy, the import is regulated to ensure prices are not inflated.

While India produces 24-25 mt of urea, about 9-10 mt are imported annually to meet the demand. The requirement of urea is assessed by the government and imports are allowed periodically based on demand, supply and prices. India was reported to have imported about one mt of urea from China during April-July this year, before the neighbouring country banned export due to a domestic shortage. Now, Russia and Egypt are the major sources.

IPL, which opted out to be a canalising agency in 2018 and has been forced by the government this time, has been successful in reducing the import prices and secured the agreement from exporters to deliver at Indian ports by December 31. “It is a great achievement to finalise the contracts in a few days that too when many countries are struggling to get urea after China, Russia and Egypt restricted/tightened their supplies,” an industry official said.

Even as some companies signed contracts at $1,000/tonne free-on-board (FoB) to supply from Egypt, the participation of Russia’s largest producer Eurochem in the IPL tender helped in lowering the prices, sources said.

Urea has a share of 55 per cent in the country’s overall fertiliser consumption, estimated at about 61 mt in 2019-20. As non-urea (MoP, DAP and complex) varieties cost higher, farmers prefer to use more urea than actually needed. The maximum retail price (MRP) of a 45-kg bag of urea is ₹242 and that of a 50-kg bag is ₹268, all prices exclusive of charges towards neem coating and taxes as applicable, against ₹1,200 for a 50-kg bag of DAP.

The Centre has not changed the MRP of urea since 2012, when it was increased by ₹50/tonne to ₹5,360.

Supply-demand

According to Fertiliser Ministry data, the requirement of urea during April-September for the kharif sowing season was 17.75 mt, whereas the availability was 20.82 mt and sales were to the tune of 16.56 mt. For the on-going rabi sowing, demand has been pegged at 17.9 mt for entire season, whereas the availability was 5.44 mt as on November 24, while 4.41 mt of urea has already been sold since October 1. This leaves about 8 mt of urea to be made available to the farmers in the remaining period.

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