Roadmap for Namrup fertiliser plant

The Assam Cabinet’s decision to hold a 40% stake in the Brahmaputra Valley Fertilizer Corporation Limited (BVFCL) at Namrup has brightened hopes for the revitalisation of the oldest gas-based fertiliser plant in the country. The revitalisation of BVFCL is not just about keeping the only fertiliser plant of the Northeast running but also about the region playing its part in the country’s efforts to cut down the urea import bill by increasing indigenous production. Around 87% of current urea consumption for agriculture is met through indigenous production, but the import bill for the remaining 13% has spiked in recent years, which has also led to a steep rise in the central government’s expenditure in the distribution of urea to farmers at subsidised cost. The state government’s move has put to rest speculations about the closure of the fertiliser plant triggered by a recommendation of closure of BVFCL made by the NITI Aayog in 2022. The argument advanced in support of the closure then was that as per the New Public Sector Enterprises Policy for Atmanirbhar Bharat, the ‘fertiliser’ sector is a non-strategic sector in which public sector enterprises shall be considered for privatisation, where feasible; otherwise such enterprises shall be considered for closure. The NITI Aayog’s recommendation sparked off a strong protest in the state, prompting the central government to reassure the people of Assam about its revival. The Cabinet Committee on Economic Affairs in 2015 approved the setting up of a new Brownfield Ammonia-Urea Complex, the Namrup Unit IV, in the existing premises of BVFCL through open bidding of 52% equity of the project in Public Private Partnership mode. The proposal, however, did not materialise as no proposal was received from any investor. Official data shows that during the financial year 2023-24, the BVFCL produced 1.80 lakh MT of urea as compared to 2.23 LMT in 2022-23. The shortfall in production is attributed to frequent tripping and breakdown of plant equipment. Farmers getting urea at an affordable price on time is crucial for the country’s food security. Urea is sold to farmers at a subsidised price of Rs 242 per bag of 45 kg. The government provides the difference between the delivered cost of urea at the farm gate and net market realisation to urea manufacturers/importers as a subsidy. Therefore, even when a country becomes fully self-sufficient in urea production, the government will still be required to pay the subsidy for making the fertiliser at an affordable and subsidised cost. Nevertheless, cutting down the urea import bill through self-sufficiency will unlock about Rs 28,000 crore, which will be available for undertaking infrastructure development and other interventions in the farm sector for boosting agricultural production and growth. It is in this context that the revitalisation of BVFCL and the setting up of the Namrup Unit IV are of national importance and must not be reduced to an initiative to placate the people in the state about the revival of an industrial unit in an industry-deficient state. The central government pushing organic cultivation to reduce urea and other chemical fertiliser use is a major initiative for soil health restoration. The PM Programme for Restoration, Awareness Generation, Nourishment, and Amelioration of Mother Earth (PMPRANAM) scheme is a flagship scheme to implement this policy. The scheme envisages the promotion of alternative fertilisers—organic, bio, nano, urea, and natural/organic farming—to reduce dependency on chemical fertilizers. Under the scheme, 50% of the fertiliser subsidy saved by a state or union territory in a particular financial year, through the reduction in the consumption of chemical fertilisers compared to the average consumption over the previous three years, is to be provided back to that state as a grant. The central government does not provide any assistance for the distribution of biofertilizer, but under the soil health and fertility component of Rashtriya Krishi Vikas Yojana, biofertilizers are promoted through provisions of financial assistance for strengthening of infrastructure for production and quality control. The scheme is proposal-driven, and assistance is granted on the basis of proposals submitted by states for setting up bio-fertiliser units and bio/organic fertiliser quality control labs. The demand for chemical fertiliser is not going to decline drastically even after the promotion of organic farming and alternate fertilisers, as a large number of high-yielding varieties that require chemical fertiliser for increasing production have already become part of agricultural practice in most states in the country. The state and the region can leverage their traditional organic farming practices to explore the new opportunities of commercially viable bio-fertiliser plants to ensure the availability of organic/bio-fertiliser at an affordable cost to benefit from the PMPRANAM scheme and maximise the grant provided by the centre by cutting down consumption of chemical fertiliser. The central government should extend higher benefits to the states in the Northeast for reduction in chemical fertiliser, as the region by default is organic. The revitalisation of BVFCL and its Namrup plant will have to consider such policy directions while preparing its roadmap.