National Fertiliser gets nod to convert three units to gas

The cabinet committee on economic affairs on Thursday approved a National Fertiliser Ltd project to convert three liquid fuel-based fertiliser plants to natural gas at a cost of Rs4,067 crore.

A government statement said the three feedstock conversion projects of NFL will be at its Nangal, Panipat and Bathinda units at a cost of Rs1,478.63 crore, Rs1,292.94 crore and Rs1,294.94 crore respectively, the official statement said.

The union cabinet also allowed income tax exemption to subsidies given to these projects. This will lead to savings of Rs40 crore per unit per year in the form of reduction in the release of fertiliser subsidy, after conversion of these units, it said.

The conversion will also help units to modernise their existing ammonia plants and achieve better energy efficiency, it added.

Fertiliser makers in India are given subsidy by the government to compensate for the shortfall caused by state-set cap on prices for farmers. In February last year, India unveiled a plan to help fertiliser plants use natural gas instead of fuel oil and naphtha.

India's gas output has almost doubled after Reliance Industries began producing gas from its deepwater block off the east coast.