India continues to significantly increase its urea import from Iran, while state-owned Indian oil companies gradually cut down their oil purchase from the sanctions-hit nation that is being penalised by the US and the EU for its nuclear enrichment programme.
According to official data, India?s urea import from Iran jumped around 80% to 19.97 lakh million tonne (LMT) in 2011-12 from the 11.13 LMT purchased in 2010-11. In the current financial year till July-end, India imported 3.24 LMT from Iran and is projected to buy more quantity from the country than the last year.
On the other hand, Indian refiners have targeted to cut Iranian oil imports by 11% to about 15.5 million tonne this fiscal from last year. India has slashed its oil imports from Iran to 17.44 million tonne in 2011-12 from 21.197 million tonne in 2010-11.
OPEC?s second largest oil producer is struggling to cope with the sanctions that took full effect on July 1.
Last year, India imported a total of 78.34 LMT of urea from 15 countries. Iran was the second largest exporter of the fertiliser to India after Oman (24.16 LMT), the country where Indian fertiliser companies have a joint venture production facility with the local government. According to sources in the fertiliser industry, the STA, which are designated to import urea, did not find major hurdles in making trade payments.
The country’s largest buyer of Iran crude oil, Mangalore Refinery and Petrochemicals (MRPL), reduced its oil imports to 5 million tonne this fiscal from 6.2 million tonne in 2011-12. MRPL bought around 7.1 million tonne of crude oil during the year 2010-11.
Essar Oil, the second largest buyer of Iranian crude, has also reduced imports this financial year by 15% from 5 million tonne and has already entered into contracts with national oil companies in Columbia and Mexico for crude. Falling imports pushed Iran to sixth position in the list of India’s largest suppliers of oil.
At present, three state-run agencies? MMTC, Indian Potash (IPL) and State Trading Corporation (STC) ? import urea on behalf of various distributors, who get state subsidy based on their audited retail sales figures.
India produces about 22 million tonne of urea and consumes more than 30 million tonne. In 2010, the government increased the retail price of urea by 10% to R5,310 per tonne, which is still the current retail price. Now, India imports urea at nearly five times the administered retail price.
