Sustainability of Namrup fertiliser unit

The Cabinet Committee of Economic Affairs giving approval to a grant-in-aid of Rs 100 crore to the Brahmaputra Valley Fertiliser Corporation Limited (BVFCL) at Namrup has brought some relief to the first gas-based urea-producing public sector unit in India. The PSU will be able to undertake minimum functional repairing of existing two vintage plants with this amount. The BVFCL will be able to utilize the amount to replace and overhaul certain equipment and machinery for safe, sustainable, and economic manufacturing of urea. A cloud of uncertainty was looming large over the fertiliser industry as it has been unable to maintain cost-effective production level despite availability of feedstock and infrastructure due to obsolete machinery. A blast at one of two functional units led to shutdown of the fertiliser plant in January and added to the uncertainties. Of the two running vintage plants -Namrup -II and Namrup-III, the blast in 44-year-old Unit -II was believed to have been caused by obsolete and outdated machinery and equipment. The PSU has been compelled to run the two vintage plants that have outlived their lives to keep producing urea as the work on the proposed fourth unit is yet to begin. The grant-in-aid is expected to restore urea production capacity of BVFCL of 3.90 lakh MT a year and ensure timely availability of urea to tea industry and farm sector in Assam and neighbouring states. In 2019-20, the PSU produced 2.70 lakh MT, but the production declined to less than 2 lakh MT in 2020-21. According to Corporate profile of BVFCL, the second unit of the Namrup fertiliser plant put up at a cost of Rs 74.60 crore with annual production capacity of 3.30 lakh MT of urea went into commercial production in 1987. The availability of surplus gas at Naharkatiya-Moran and Lakwa oilfield led to establishment of the third unit with a capacity of 3.85 lakh MT in 1987 wit a cost of Rs 285.55 crore. "The vintage of the plant technology, equipment/machines contributed to the poor performance. Due to various reasons, mainly due to frequent equipment failures caused by obsolete and unproven technology, the plants could not perform as per expectations," it adds. In 2018-19, equipment failures caused frequent disruption in production. The BVFCL plans to spend the grant-in-aid in two phases. Rs. 59 crore in the first phase to meet immediate requirement and the rest amount in second phase to ensure running of the plants for another four to five years. The grant-in-aid will be useful to make operation of the existing units smoother but setting up of the brownfield ammonia-urea producing fourth unit is critical to ensuring long-term sustainability of the gas-based industry. The Central government approved the proposed Namrup Unit IV in 2015 with a capacity of 8.64 lakh MT per annum at a project cost of Rs 4,500 crore. The annual production capacity of the proposed unit was subsequently revised an increased to 12.70 lakh MT with a project cost of Rs 7,600 crore. The construction and commissioning of the fourth unit will take at least four years and ensuing safe and sustainable production of the existing two units till its commissioning is a challenging task. The grant-in-aid has come nearly ten years after it was confirmed in 2011 that the existing plants can be run for another three four years. Even though Assam government has been taking up the matter with the Central government, the proposed fourth unit is yet to get approval of the Union Cabinet. Setting up of the fourth unit that will employ state-of-the-art technology will help BVFCL to increase it urea production to almost three times with same quantity of natural gas that is being used by the existing plants. The fourth unit is proposed to be implemented by a joint venture of National Fertilizers Limited (NFL), Oil India Limited, Rashtriya Chemicals and Fertilizers Limited, BVFCL and the Assam Government. It will also help bridge the demand supply gap in chemical fertiliser in the Northeast region. The delay on the part of the Union Cabinet in granting approval to the fourth unit has given rise to the apprehension of the country first gas based chemical fertiliser industry being pushed the same fate as that of the Nagaon Paper Mill and Cachar Paper Mill of Hindustan Paper Corporation despite availability of raw material, infrastructure, and the market. The BVFCL submitted the proposal for a grant-in-aid of Rs 100.86 crore in 2018 and it has been accorded approval in 2021. The fourth unit was a promise made by the Bharatiya Janata Party in 2014 Lok Sabha elections and seven years have elapsed since then. The grant-in-aid of Rs 100 crore is a grim reminder of an unkept promise. Expeditious setting up of the fourth unit is poised to become a major poll plank in upcoming Assam Assembly electioneering.