Date:03/05/2008 URL: http://www.thehindu.com/2008/05/03/stories/2008050359050600.htm

Andhra Pradesh

Ramagundam fertilizer unit to be revived

M. Malleswara Rao

Natural gas expected to be supplied by RIL

When gas is used as fuel, production cost of fertilizer falls
State Government anticipating sea change in the industrial scenario

HYDERABAD: The Ramagundam unit of the Fertiliser Corporation of India (FCI) in Karimnagar district, which was closed a few years ago, is proposed to be revived by using natural gas that is expected to be supplied by the Reliance Industries Limited (RIL) from the Krishna-Godavari basin.

When gas is used as fuel, the production cost of fertilizers fall and correspondingly reduce the subsidy by the Union Government.

Leveraging this advantage, the State Government is planning to request the Centre to expedite re-opening of the FCI’s Ramagundam unit.

The Government is anticipating a sea change in the industrial scenario once RIL begins gas supplies.

Apparently pleased with the Centre ruling in their favour and fixing the gas price at $ 4.33 for million metric British thermal unit (mmBtu), which works out to Rs. 7 a cubic metre, RIL officials have offered as much supply of gas as required by the State.

Rider

This offer is, however, subject to the disposal of a case in the Bombay High Court in the case filed by the Anil Ambani group.

Following RIL’s assurance, the 2,100-MW capacity power project taken up at Karimnagar has already been converted into a gas-based plant.

Indications are that the RIL will be in a position to meet the State’s total requirement of 40 MCMD (million standard cubic metres per day).

Out of this 10 MCMD each is needed for existing and contemplated power projects, the Karimnagar power project and for piped gas supply to households and 5 MCMD for fertilizers units at Ramagundam and Kakinada.

Metallurgical industries

The requirement by cement, steel-rolling, ferro and non-ferro alloys, and other industries has been projected at 5 MCMD.

In fact, “we want to encourage metallurgical industries in a big way to make use of the available gas”, said an Industries Department official.

Meanwhile, the Director-General, Hydro-carbons, has certified that 40 MCMD of gas will be available shortly from the RIL K-G Basin source.

It is expected that the total availability from K-G basin in the next two to three years will touch 120 MCMD.