New fertiliser policy will attract investment by private sector: Crisil

Economy Bureau
Posted: 2008-08-19 00:00:03+05:30 IST
Updated: Aug 19, 2008 at 0000 hrs IST

Font Size

Feedback

Discuss

India Inc for fertilizer jv in Syria, DTAA signed

The new fertiliser policy announced by the Centre will boost investment in the sector from private players. Crisil in its research report has observed that gas availability will not be a constraint for new urea capacities, post December 2008 following the commencement of gas supply from Krishna Godavari basin.

Crisil estimates that the long term pricing of domestic gas will be between $7-9 per million British thermal unit (mmBtu) adjusting for the declining availability of APM (administered price mechanism) gas.

Crisil admits that the profitability of the sector is determined by the availability of natural gas, which is a key input and the end prices of urea. The policy indicates the normative price of urea at 85% of the import parity price, subject to a floor price of $250 per tonne and a cap of $425 per tonne respectively for urea produced from the new capactities going forward. Currently, urea trades at over $700 per tonne in the international markets, which is a significant premium over the cap price suggested by the policy.

Crisial research head Sudhir Nair said, “We have observed a strong correlation between crude oil and urea prices. Crude oil prices are expected to decline sharply to around $84 per barrel by 2012. Urea prices too are expected to decline to around $400 per tonne- a level closer to the ceiling price fixed by the new fertiliser policy.”

Post Comments

Comments: (Limit 3,000 characters)

Name		Message
Email ID
Subject

TERMS OF USE:
The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).

I agree to the terms of use.

Latest News

Print Edition

Events

New fertiliser policy will attract investment by private sector: Crisil

Post Comments