REPORT

OF

THE COMMITTEE

ON

EFFICIENT

ENERGY LEVELS ETC.

FOR

UREA UNITS

MAY, 2003

Index

S.No. Topic Page Nos.

I. Introduction 1 - 2

II. Recommendations of ERC 2 - 3

III. Constitution of the Committee 3 - 4

IV. Deliberations of the Committee 4 – 12

V. Pre-set energy levels for Stage – I 12-13

VI. Pre-set energy levels for Stage – II 13 – 17

VII. Raw material mix of inputs 17 -19

VIII. International energy levels 19 – 21

IX. Mechanism for computation of escalation/de-escalation

21 - 25

X. Switchover of non-gas based units to Gas/LNG in Stage – III.

25 -28

XI. Energy level benchmarking (beyond Stage – II)

28 – 31

XII. Recommendations 31 – 37

XIII. Chairman‟s comments on certain

issues raised by two members

38-48

Annexures

I. Annexure-I Executive Summary of ERC recommendations

49-56

II. Annexure-II-A DOF‟s OM dated 25.6.2002

57-59

III. Annexure-II-B DOF‟s OMs dated 28.8.2002, 23.3.2003 and 1.4.2003.

60-66

IV. Annexure-II-C 67-71

DOF‟s OM dated 30.1.2003

V. Annexure-III List of 32 urea units under different groups

72

VI. Annexure-IV to IX Data regarding energy levels and raw material mix of inputs for urea units in different groups

73-113

VII. Annexure-X International energy levels.

114-120

FOREWORD

I have great pleasure in writing the foreword to the Report of the

Committee which was appointed by the Department of Fertilizers to suggest

energy norms for urea units and other related matters, keeping in mind the need

to do away with individual unit based Retention Pricing Scheme and introduce a

Group Concession Scheme.

The Committee met on eleven occasions in Delhi and had the benefit of

interaction with the representatives of the industry. The data was collected from

the industry on the pattern of F.I.C.C.

The Committee has made its recommendations after taking into account

the developments that have taken place since the submission of the report by the

Expenditure Reforms Commission. The Committee noted during the

deliberations that the heterogeneity of the industry is a major constraint in

evolving any model based on uniform norms. There are significant differences

even within the same group or category. The Committee, however, has made an

earnest effort to bring about as much uniformity as possible, despite this

handicap.

The Committee has also noted that the enactment of the Energy

Conservation Act, 2001 has introduced a qualitative change in the situation. The

declaration of the fertilizer industry as an energy intensive industry under the Act

and the constitution of the Bureau of Energy Efficiency are significant

developments. Now that the Act has came into force, the major decisions in

regard to the subject matter of the Committee can be taken only by the newly

created/designated agencies, which are sure to initiate such action as they deem

fit under the Act.

I would be failing in my duty if I do not place on record, my deep

appreciation of the participation in the deliberations of the Committee, of Ms. S.K.

Sekhon Executive Director, FICC, Shri Sudhir Krishna Joint Secretary

(Fertilizers) and Shri S. Chandra, Joint Adviser, Department of Fertilizers.

Indeed the richness of their experience has contributed greatly in formulating its

recommendations. The Committee is also grateful to the Chairman, Vice-

Chairman and the Director General, Fertilizers Association of India and the Chief

Executives of HFC, NFL, MFL, SFCL, RCF and FACT for making presentations

before the Committee and Shri S. Nigam, Economic Adviser, Ministry of

Commerce and Industry for attending a meeting of the Committee as a special

invitee.

I am also deeply grateful to all the members of the Committee but for

whose meaningful participation in the deliberations, it would not have been

possible to finalize the Report. I also appreciate the assistance I got from Shri

Manoj Kumar, Director in the Department of Fertilizers, who is also Member

Secretary of the Committee. I also thank Shri S.P.S. Tomar, SO Department of

Fertilizers for providing backup support and efficient secretarial assistance.

Finally, the Committee would like to thank FACT, RCF and IFFCO for making

available their premises at New Delhi for holding most of the meetings of the

Committee.

( A.V. Gokak )

Chairman

I. INTRODUCTION

The objective of providing fertilizers to farmers at affordable prices, while

simultaneously ensuring an adequate return on investment to the entrepreneurs

has been the aim of the fertilizer pricing policy of the Government. The

introduction of the Retention Price Scheme (RPS) w.e.f. 1st November, 1977 has

been one of the early initiatives in this direction. Under the Scheme, the

difference between the statutorily notified sale price and the retention price (cost

of production as assessed by the Government plus a reasonable return on net-

worth) is paid as subsidy. The retention prices are determined unit-wise based

on a combination of norms and actuals pertaining to the project cost, capacity

utilization, cost of raw materials and such other factors. Presently, the RPS is

operating in respect of urea manufacturing units only. Though, the RPS has,

over the years achieved, to a remarkable degree, its professed objectives of

increasing investment in the fertilizer industry and thereby creating new

capacities and enhanced production along with increasing use of chemical

fertilizers especially, nitrogenous fertilizers, some of the deficiencies of the

Scheme have also become too obvious; nor is the Scheme any longer in tune

with the current trend of deregulation and decontrol.

There have been many attempts in the past to remove the deficiencies of

the RPS. Some of the most prominent ones are incorporated in the

recommendations of the High Powered Committee (HPC) of Secretaries on RPS

in 1986, HPC on Fertilizer Consumer Prices, 1987, Joint Parliamentary

Committee in 1991, study of the Bureau of Industrial Costs and Prices (BICP),

1992 and the High Powered Review Committee in 1998. The last major attempt

to suggest a viable alternative to the RPS for urea units was made in September,

2000, in the report of the Expenditure Reforms Commission (ERC), headed by

the former Finance Secretary, Shri K.P. Geethakrishnan.

The recommendations of the ERC were all encompassing in nature and

covered almost all the vital issues pertaining to the urea industry. The ERC

report, inter alia, delineated the contours of a new urea pricing policy in detail and

even gave a vision of the goal to be reached in a none too distant future, i.e.

eventually bringing fertilizer prices charged to farmers to the level of import parity

price; protecting the real incomes of the small farmers, maintaining food security

and promoting a balanced use of N, P & K. The executive summary of the

recommendations of the ERC on „Rationalising Fertilizer Subsidies‟ is given in

Annexure-I to this Report.

II. THE ERC RECOMMENDATIONS

In brief, the ERC report envisages dismantling of the control system in a

phased manner, leading at the commencement of the fourth phase, to a

decontrolled fertilizer industry which can compete with imports albeit, with a small

level of protection and a feedstock cost differential compensation to

naphtha/LNG based units to ensure self-sufficiency.

The ERC postulated four phases in the proposed new pricing policy for

urea units, beginning with the discontinuance of the RPS w.e.f. February 1, 2001,

along with the introduction of the group based concession scheme. The scheme

of ERC was as follows:

(i) First Phase

(a) In this phase, beginning February 1, 2001, the existing units are to be

grouped into five categories – pre-1992 gas based units; post-92 gas

based units; naphtha based units, FO/LSHS based units and mixed

feedstock based units.

(b) Individual retention price scheme will be scrapped and in its place a

urea concession scheme with a fixed amount of concession for each of

these groups will be introduced.

(c) The distribution control mechanism will be done away with, though the

maximum retail price arrangement will be continued.

(d) The sale price of urea in real terms to be increased by 7 per cent every

year w.e.f. 1.4.2001.

(ii) Second Phase

In the second phase, beginning April1, 2002, the concession rates are

reduced to reflect the possibility of reasonable improvement in feedstock usage

efficiencies and reduction in capital related charges (CRC).

(iii) Third Phase

The third phase will begin on April 1, 2005 and reflects the feasibility of all

non gas based plants to modernize and switch over to LNG. For plants which do

not switch over to LNG as feedstock, only the level of concession that the unit

would have been entitled to if it had switched over to LNG, would be allowed.

(iv) Fourth Phase

The fourth phase begins on 1.4.2006, when the industry is decontrolled.

The farm gate prices will reach Rs. 6903 by 1.4.2006, a level at which the

industry can be freed from all controls and be required to compete with imports,

with variable levy ensuring availability of such imports at the farm-gate at Rs.

7,000 per tonne of urea. While no concessions will be necessary from this date

onwards for gas based, FO/LSHS and mixed feedstock plants, existing naphtha

plants converting to LNG as also new plants and substantial additions to existing

plants will be entitled to a feedstock differential with that for LNG plants serving

as a ceiling.

III. CONSTITUTION OF THE COMMITTEE

The ERC, in addition to recommending a group concession scheme for

urea manufacturing units, had also envisaged improvement in the energy

efficiency in Phase-II. The report had also indicated certain energy consumption

norms for the non gas based units. While examining the proposals of ERC, the

Department of Fertilizers (DOF) decided to work out pre-set energy consumption

norms for each group, including the gas based units. This Committee was

accordingly constituted to give its recommendations on the following issues

concerning the urea industry, keeping in view, the recommendations of the ERC:

i) Efficient energy levels for the urea manufacturing units,

keeping in view the existing norms and the norms which the

modern plants are expected to achieve. This exercise was to

be undertaken also by examining the desirability of

feedstock/technology based efficient energy levels and

possible milestones in terms of achieving international

standards.

ii) Mechanism for determining the escalation and de-escalation

in the feedstock cost for various units/groups.

iii) Mechanism for feedstock differential cost in respect of various

non-gas based units after Stage-II keeping in view the likely

scenario about availability, pricing and infrastructure required

for the LNG.

iv) Mechanism for treatment of substitution of feedstock due to

non-availability of gas/LNG etc.

A copy each of the Department of Fertilizers‟ Office Memoranda dated

25th June 2002 and 28th August, 2002, 24th March, 2003 and 1st April 2003 issued

in this regard is placed at Annexure-II-A and II-B respectively.

IV. DELIBERATIONS OF THE COMMITTEE

In deliberating on the issues covered by the terms of reference of the

Committee, a composite approach was followed, comprising, inter-alia, the

following:-

Collection of actual operating data for last five years, (1997-98 to 2001-02)

from all the thirty-two urea-manufacturing units and its classification in

analyzable components.

Examination of the report of the ERC titled „Rationalizing Fertilizer

Subsidy‟ to serve as the backdrop for formulation of its recommendations.

Interaction with representatives of fertilizer industry and the Fertilizer

Association of India (FAI), the apex body of the fertilizer industry.

Analysis of background notes, suggestions and notes/memoranda

submitted by the members of the Committee and by the representatives of

the industry.

In all, the Committee met in New Delhi eleven times between July, 2002

and March, 2003 before finalizing its recommendations.

The Committee has also taken cognizance of the following developments

that have taken place after the ERC submitted its report:

(i) ERC had assumed that the fertilizer industry would be able to obtain

naphtha and Fuel Oil/LSHS at import parity prices. However, the

fertilizer industry could not meet the expectation largely on account of

the non-availability of the required infrastructure for handling import of

naphtha and FO/LSHS. The necessary infrastructure was available

only with the oil companies and they were generally unwilling to permit

the fertilizer industry to make use of the same. The significant saving

that the ERC had expected on account of import of naphtha and

FO/LSHS at import parity prices has, therefore, not accrued.

(ii) The ERC had estimated that LNG would be adequately available in the

country to facilitate conversion of non-gas based plants to LNG by the

year 2004. This assumption has not materialized. The recent discovery

of gas in deep waters of Krishna Godavari offshore and in Rajasthan

is still to be further appraised to determine firm reserves in the area

from the point of view of commercial production. As of now, it is

difficult to get a firm idea about either the quantum or timing of

availability of gas in different locations to facilitate conversion of non-

gas based fertilizer plants to gas for feedstock.

(iii) The Government‟s decision on the new pricing policy for urea units to

replace the RPS is now available and the Government of India,

Department of Fertilizers have vide their OM dated 30.1.2003

announced the new pricing policy for urea units which would be

implemented from 1.4.2003. A copy of DoF‟s O.M. dated 30.1.2003 is

appended as Annexure-IIC. The Committee noted that the new pricing

policy for urea units is group based in sharp contrast to unit-specific

Retention Price Scheme.

a) Stages considered in the Report

The Committee has considered the same stages for its

recommendations as considered by the Government for its new Group

Concession Scheme for urea units, namely:

I. Stage-I – 1.4.2003 to 31.3.2004

II. Stage-II – 1.4.2004 to 31.3.2006

III. Stage-III – 1.4.2006 onwards.

b) Grouping of plants

i) Gas based plants:

Gas based plants have been divided into two groups, namely, i) Pre-92

Gas based plants and ii) Post-92 Gas based plants, in line with the

recommendations of ERC.

ii) Naphtha based plants:

Naphtha based plants have been divided into two groups namely i) Pre-92

Naphtha based plants and ii) Post-92 Naphtha based plants. The naphtha

based plants which were set up after 1992, have a larger size and are more

energy efficient, but also entailed higher capital costs. On the other hand,

the older plants i.e. pre-1992, had lower capital costs but are less energy

efficient. These will have to make very intensive efforts in order to improve

efficiency in the use of energy and cannot be expected to be as energy

efficient as the post-1992 plants unless they undertake substantial capital

investments. Therefore, it was considered prudent to divide the naphtha

based plants into two different groups i.e. pre-1992 and post-1992 naphtha

based plants.

iii) FO/LSHS based plants:

FO/LSHS based plants have been kept in a single group in line with

the recommendations of ERC.

iv) Mixed Energy based plants:

In line with the recommendations of the ERC, the Committee has

considered such of the gas-based units to be in the mixed energy based

group, whose consumption of naphtha/FO/LSHS is more than 25% of the

total energy consumption. NFCL-II was included by ERC in this group as its

consumption of raw material was assumed in the ratio of 30:70 for gas and

naphtha, respectively. Simultaneously, ERC had observed that this ratio was

likely to change in future in view of additional allocation of gas. The ERC had

accordingly, recommended that the actual mix needs to be reviewed for this unit

periodically at the time of grant of concession.

The Committee has scrutinized the data pertaining to the NFCL-II unit and

has found that this unit has been using less than 25% of non-gas energy in the

last year taken up for analysis, i.e. 2001-02. Hence, NFCL-II has been included

in the post-92 gas based group and not in the mixed energy based group.

Based on the above definitions regarding grouping, all the plants have

been divided into six groups as given below:

Groups Description No. of plants

Group-I Pre-92 Gas based plants 6

Group-II Post-92 Gas based plants 7

Group-III A Pre-92 Naphtha based plants 8

Group-III B Post-92 Naphtha based plants 2

Group-IV FO/LSHS based plants 6

Group-V Mixed Energy based plants 3

Total no. of plants 32

The list of all the thirty-two urea plants is given in Annexure-III. Given the

uncertainty about the availability of gas, at least in the near future, the extent of

alternative fuel/feedstock is also likely to keep on changing. The Committee

recommends that in case consumption of alternative feedstock/fuel in a

gas based unit exceeds 25%, the classification of the unit should be shifted

from gas based to the mixed energy group until the mix again changes

warranting its inclusion in the gas based group. Likewise, the classification

of a unit in the mixed energy group may also undergo similar change. The

Committee recommends that this exercise should be undertaken on an

annual basis.

c) Collection of actual operating data:

The data about energy consumption figures was collected for the last five

years i.e. from 1997-98 to 2001-02 from all the thirty-two urea manufacturing

units. Units were asked to furnish the break-up of energy consumption data in

terms of various energy inputs used for the manufacture of urea. In order to

maintain uniformity and comparability in the collection of data, proformae were

devised and the units were requested to provide the data in the prescribed

proformae on FICC pattern and as furnished to FICC earlier. The data collected

from the units and their group-wise analysis is enclosed as Annexure-IV to

Annexure-IX. The Committee has based its observations and recommendations

on the data so collected. The Committee noted that the basic figures as also the

conversion calculations into Gcal of energy as given by each urea unit are liable

to be scrutinized by the Government at its own level.

d) Outlier Plants:

During group-wise analysis of the five years‟ energy consumption data, it

was observed that some plants were having too high or too low specific energy

consumption than the average of the group. These variations arise, on the one

hand, due to technological obsolescence, besides operational inefficiencies

leading to high consumption of energy and, on the other hand, due to economies

of scale and adoption of improved technology leading to lower energy

consumption. The Committee felt that inclusion of such plants in calculating the

average energy of the group would give abnormally high or low values for the

group. In order to remove this aberration, the Committee decided that the plants

having more than 20% deviation in weighted average specific energy

consumption as compared to the weighted average specific energy consumption

of the group for the five years under consideration (i.e. 1997-98 to 2001-02), shall

not be considered for arriving at the group weighted average energy

consumption and such plants shall be termed as Outlier Plants in the group. It

was further decided that such Outlier Plants shall be dealt with separately. In

order to identify such plants, all plants in a particular group, including outlier

plants, were considered for calculating the weighted average specific energy

consumption. Thereafter, the plants whose own weighted average specific

energy consumption was having a deviation of more than 20% from the group

weighted average, i.e., outlier plants were excluded while re-computing the

weighted group average.

Based on above, the group-wise list of Outlier Plants is given below:

Group Outlier plants Group

specific energy consumption

(5 years’ weighted average)

(Gcal/MT Urea)

Percentage deviation from 5 years’ weighted group average

Name of the plant

Energy consumption (5 years’ weighted avg.) (GCal/MT Urea)

Group-I i)HFC,

Namrup-III*

ii)RCF, Trombay-V

17.291

10.433

6.665 159.43

56.53

Group-II - - 5.857 -

Group-III A FACT 11.320 8.116 39.48

Group-III B - - 6.263 -

Group-IV i)FCI, Sindri

ii)NLC, Neyveli

iii)GNFC, Bharuch

17.459

16.259

8.170

10.426 67.46

55.95

(-) 21.64

Group-V - 7.129 -

* The Namrup units of the erstwhile HFC now constitute a separate

company namely, the Brahmaputra Valley Fertilizer Corporation Limited.

e) Analysis of data:

The Committee worked out the following six alternative scenarios for all

the six groups (Please refer Annexure-IV to Annexure-IX for details): -

Case-I Weighted average specific energy consumption of all the

plants of the groups considering last five years‟ operating data

(1997-98 to 2001-02).

Case-II Weighted average specific energy consumption of all the

plants of the groups (excluding outlier plants) considering last

five years‟ operating data.

Case-III Weighted average specific energy consumption of all the

plants of the groups considering last 3 years‟ operating data

(1999-2000 to 2001-02).

Case-IV Weighted average specific energy consumption of all the

plants of the groups (excluding outlier plants) considering last

3 years‟ operating data.

Case-V Weighted average specific energy consumption of all the

plants of the groups considering only last year‟s operating

data (2001-02).

Case-VI Weighted average specific energy consumption of all the

plants of the groups (excluding outlier plants) considering only

last year‟s operating data.

Group-wise weighted average specific energy consumption (Gcal/MT

urea) for all the six alternative scenarios is given below (please refer Annexure-

IV to Annexure-IX for details):

Groups Case-I Case-II Case-III Case-IV Case-V Case-VI

5 years’ average

(1997-98 to

2001-02)

5 years’ average excluding outliers

3 years’ average

(1999-2000 to

2001-02)

3 years’ average excluding outliers

Last year’s average (2001-02)

Last year’s average excluding outliers

Group-I 6.665 6.110 6.566 6.066 6.267 5.970

Group-II 5.857 5.857 5.796 5.796 5.734 5.734

Group-IIIA 8.116 7.915 7.964 7.773 7.787 7.732

Group-IIIB 6.263 6.263 6.206 6.206 5.902 5.902

Group-IV 10.426 10.190 10.163* 10.067* 9.546 9.982

Group-V 7.129 7.129 7.103 7.103 7.032 7.032

* For NFL Bhatinda, the lowest specific energy consumption of 10.210 Gcal/MT

urea and urea production of 567367 MT, achieved during the year 1997-98

have been considered for each of the three years for calculation of three years‟

group average for group-IV. This is because in the remaining years, the

consumption of energy in this plant was significantly higher, and the inclusion of

these figures would have unduly inflated the group weighted average.

V. PRE-SET ENERGY LEVELS FOR STAGE-I:

The recommendations for pre-set energy levels for Stage-I (1.4.2003 to

31.3.2004) are not one of the specific terms of reference of the Committee. The

ERC has also not given any normative pre-set energy level for this stage but has

only considered the actual energy consumption levels of each group for Stage-I.

The Committee, therefore, does not wish to recommend any efficiency norms for

various groups for this stage. Moreover, this stage begins from April 1, 2003 and

urea units do not have any time to adjust to any new norms. It is recommended

that the FICC may calculate escalation/de-escalation in the variable cost for

all the urea units for Stage-I on the pattern of the current practice under

RPS.

VI. PRESET ENERGY LEVELS FOR STAGE-II:

In analyzing the last five years‟ actual operating data of the urea plants of

different groups, the Committee observed that in line with the trend over the last

three years, most of the plants achieved the lowest energy consumption figures

in the last year considered, i.e. 2001-02. However, for recommending the preset

efficient energy levels for Stage-II for the urea units in different groups (including

units considered outliers), the Committee has not considered the performance of

that one year only, i.e. 2001-02. This is because analysis of the data reveals

wide fluctuations from year to year. It may be emphasized that a single year‟s

data may not be true representative of a performance that can be sustained over

a long period as the same is influenced by internal as well as external factors:

internal factors like on-stream days achieved depending upon, among others,

whether annual turn around was taken or not and external factors like availability

of feedstock, particularly gas. Unlike plants located in other parts of the world,

gas based plants in India do not have 100% assured supply of gas and this has

in fact forced some of the units to install dual feed facility so that they may be

able to make up for this shortfall of gas by naphtha, whenever it is necessary.

The level of production and consequently, efficiency of operation also depends

on demand influenced by seasonal condition etc.

It is against this background that the norms for Stage-II have been

worked out on the basis of three years‟ weighted average, (1999-2000 to 2001-

02), excluding outliers.

Based on the above, the recommended preset energy levels for Stage-

II along with those recommended by the ERC are given below:-

Group Energy levels for Stage-II (Gcal/MT Urea)

Recommended by ERC

Based on Actual data (3 years’ weighted average energy consumption including outliers)

Based on Actual data (3 years’ weighted average energy consumption excluding outliers)

Recommended by the Committee

Group-I 6.62 6.566 6.066 6.07

Group-II 5.93 5.796 5.796 5.80

Group-IIIA 7.0 7.964 7.773 7.77

Group-IIIB 7.0 6.206 6.206 6.21

Group-IV 9.75 10.163 10.067 10.07

Group-V 7.0 7.103 7.103 7.10

It has to be emphasized that the outliers on the higher side face a number

of problems - technical, managerial and financial - which affect their techno-

economic viability in the short run as well as in the long run. The percentage of

deviation from the weighted average of the concerned group is nothing but a

symptom of deeper malaise that plagues them. Only one year is not enough for

such units to equip themselves to tackle this problem. The Committee is,

therefore, of the view that these plants deserve a separate treatment for the first

year of Stage-II (i.e., 1.4.2004 to 31.3.2005) in order to prepare them to attain the

efficiency driven group energy consumption norms. The Committee, therefore,

recommends that the specific energy consumption norms for these outlier

plants on the higher side, for the first year of Stage-II should be the same

as considered by the FICC in respect of these units for the 8th pricing

period and thereafter respective group energy norms should be made

applicable in respect of these outlier units also. This, in addition to giving the

outlier plants reasonable time to rectify their deficiencies, would also enable them

to take a commercial decision about continued operations. However, the

specific energy consumption norm for both the years of Stage-II for GNFC,

Bharuch, which is an outlier on the lower side in the FO/LSHS group,

should be the same as considered by the FICC for the 8th pricing period in

order to avoid any undue gain to it in adopting the principle of group

energy consumption norm for the outlier plants in the second year of

Stage-II.

In view of the recommendations for the pre-set energy norms for Stage-II

as given above, the Committee recommends that the concession rates for

the urea units for Stage-II may be reworked by the FICC taking into account

the recommended pre-set energy norms for Stage-II. The Committee

recommends that in order to reward efficiency in energy consumption as

also to offer incentive to all urea units to attain the pre-set levels of energy

consumption in each group during Stage-II, the pre-set group energy

consumption norms may be taken for all the urea units in the group,

excluding the outliers (which have been dealt in the preceding paragraph)

irrespective of their individual energy consumption level, for working out

base concession for Stage-II as well as for escalation/de-escalation.

Note 1: The energy levels in all the groups have been recommended as the

weighted group average of the last three years‟ actual energy

consumption excluding the outliers but limited to two decimal places.

Note 2: The last three years‟ weighted average energy consumption level

for groups II, IIIB and V does not show any variation both with or without

outliers as there are no outliers in these groups.

Note 3: While the energy consumption levels recommended by the ERC for

Stage-II have guided the Committee in its deliberations, the Committee

has not been able to follow the ERC recommendations in their entirety.

This is mainly due to the ready availability of the actual operating data of

all the urea units for the last three years‟ (1999-2000 to 2001-02)

pertaining to their specific energy consumption. It is also due to the

differences in the composition of the different groups as proposed by ERC

and as considered by the Committee.

It can be seen that for the groups I, II and IIIB, the recommended

preset energy consumption levels are lower than those recommended by

the ERC. However, in the case of groups IIIA, IV and V, the

recommended pre-set energy consumption levels are higher than ERC

recommendations.

Note 4: The naphtha based group of the ERC report has been split into two

groups, namely, group IIIA and IIIB and the weighted average of the

specific energy consumption has been calculated separately for both the

groups. Group IIIA, which consists of pre-92 naphtha based plants, shows

higher weighted average group energy consumption level than ERC

recommendation whereas group IIIB comprising post-92 naphtha based

plants shows lower weighted average group energy consumption level

than ERC recommendation. However, the combined weighted average

energy consumption of groups IIIA and IIIB is comparable to the

recommendations of the ERC for this group as a whole.

Note 5 : In group IV (FO/LSHS), the weighted average group energy

consumption works out to be higher than that recommended by the ERC.

This is due to the fact that GNFC, Bharuch, included in this group, has

been considered an outlier on the lower side by the Committee in

determining the weighted average energy consumption level in this group

as per the actual operating data for the last three years. This is due to the

fact that GNFC plant differs significantly from NFL units at Bhatinda,

Panipat, Nangal Expansion and FCI‟s Sindri Modernization, both in

respect of size and technology. GNFC plant capacity is 1350 MT ammonia

per day while the capacity of other plants is 900 MT ammonia per day.

GNFC has adopted Texaco Process technology with two gasifiers while

other plants have adopted Shell Gasification Process with three gasifiers.

Note 6: The weighted average group energy consumption level of group V

(mixed energy) works out to be higher than ERC‟s recommendation for

this group as NFCL-II which was included in group V by the ERC and

whose weighted average specific energy consumption is lower than the

weighted average of the group, i.e. group V, has been placed in group II,

i.e., post-92 gas based.

VII. RAW MATERIAL MIX OF INPUTS:

In view of the Government‟s decision to adopt a group based urea pricing

policy to replace the RPS, the Committee considered the possibility of

recommending group wise weighted average specific energy consumption norm

per tonne of urea based on percentage mix of inputs for the last three years‟ (i.e.

1999-2000 to 2001-02) for each group, excluding outliers. This is on the same

basis as adopted for recommending total energy consumption.

In line with the above, the Committee considered last three years‟ (1999-

2000 to 2001-02) weighted average energy consumption figures (excluding

outliers) for computing the raw material mix of inputs in each group as given

below:

Group % Raw material mix (Based on energy)

Gas (NG, AG)

Naphtha (Naphtha, NGL)

Fuel Oil (FO, LSHS, HSD)

Coal Purchased power

Group-I

3 years‟ average 89.39 9.38 1.18 0.00 0.05

Group-II

3 years‟ average 89.72 10.23 (-) 0.02 0.00 0.07

Group-IIIA

3 years‟ average 0.00 62.91 18.03 12.40 6.66

Group-IIIB

3 years‟ average 0.74 88.09 6.42 4.39 0.36

Group-IV

3 years‟ average 0.00 0.75 55.42 39.78 4.03

Group-V

3 years‟ average

60.63 30.03 6.03 0.00 3.30

The Committee initially considered the desirability of recommending

normative energy mix for various groups, but later dropped the idea after

envisaging the following distortions:

(i) For Gas based units under groups I and II, some of the units could

be compelled to use naphtha for their feed/fuel requirements due to

short supply of gas which may continue for considerable period of

time. As naphtha costs four times compared to natural gas per

million Kcal, the liquidity and the cost structure of the units would be

affected adversely if significant fluctuations/changes occur in the

supplies of gas.

(ii) For mixed energy based units under group V, the mix of feed/fuel

used by each unit varies widely with respect to other units in the

group. Therefore, pre-set mix, if applied, for these plants shall lead

to undue losses and gains.

(iii) As far as group IIIA is concerned, the Committee noted that some

of the units particularly SFC-Kota, IFFCO-Phulpur-I and DIL-

Kanpur, use significant quantities of coal as fuel for generation of

power and steam. Though coal is a less efficient fuel as compared

to naphtha/FO, the average total cost of energy per MT of urea is

far less in case of these units as compared to other units in this

group using naphtha/FO for generation of power and steam. The

Committee noted that such units would benefit considerably by

adoption of notional fuel mix of the group which would entail

significant weightage for naphtha/FO, which is costlier than coal in

terms of equivalent energy. However, if their actual energy mix is

taken into account, these units will suffer significant financial loss

as, on one hand, their overall consumption would be reduced to the

group norm, they also would not get any weightage for use of

cheaper energy source like coal (which, in turn increases the

energy consumption per tonne of urea). The Committee also noted

that the remaining units in group IIIA, which do not use coal at all,

would also suffer undue loss on the basis of preset energy mix as

to that extent their usage of naphtha/FO would be artificially

suppressed.

The Committee, therefore recommends as follows:

i) In case of three plants in group-IIIA, namely, SFC-Kota, IFFCO-

Phulpur-I and DIL-Kanpur, their energy consumption and raw

material mix as recognized for 8th pricing period should

continue to be recognized even in Stage-II so that these units

do not suffer either undue loss or get undue benefit;

ii) In respect of other units in group III A as well as all units in

other groups, within the recommended group energy

consumption norm, the actual raw material mix of each unit

should be taken while working out base concession as well as

escalation/de-escalation. Any change in the raw material mix

of each unit should be continuously monitored by the FICC

and adjusted on annual basis. This system would ensure that

the actual mix of energy is reflected thereby eliminating any

chances of manipulation between different sources of energy unlike

the alternative of preset energy mix.

VIII. INTERNATIONAL ENERGY LEVELS:

While recommending the energy levels for Stage-II, the Committee has

kept in view the energy levels being achieved internationally for various

feedstocks. While making the international comparisons in this regard, one has

to note that the fertilizer plants in India do not depend on one single

feedstock/fuel unlike their counterparts elsewhere in the world. The differences in

methodology of computation may not always give a like to like comparison.

Notwithstanding the above, the Committee carried out comparison of energy

consumption figures of ammonia and urea plants of the three largest producers

in the world namely, USA, China and India on the basis of published data and

found that Indian plants compare favourably with plants outside India in terms of

the specific energy consumption.

The detailed analysis carried out by the Committee is attached as

Annexure-X. The results are summarized below:

Comparison with plants in USA

Feed Product Specific energy consumption (Gcal/MT of

urea)

USA India

Gas based plants Ammonia 9.94 9.16

Urea 7.27 6.63

Comparison with plants in China

Feed Product Specific energy consumption (Gcal/MT of

urea)

China India

Gas based plants Ammonia 8.77 8.51

Urea 6.29 6.10

Naphtha based

plants

Ammonia 9.25 9.28

Urea 6.76 6.43

FO based plants Ammonia 10.92 11.45

Comparison with 25% most efficient plants in the world

Particulars Average energy consumption

(Gcal/MT of urea)

World India

25% most efficient Indian ammonia plants 8.49 8.41

25% most efficient Indian urea plants 6.22 6.06

Note: - There is a slight difference in the figures quoted in the above tables. This

is because, as indicated in Annexure-X, the data in various tables has been

taken from different published sources.

While the international comparison does reveal that the Indian fertilizer

industry compares favorably with international energy consumption levels, the

improvement in the efficient use of energy is an ongoing process. As per the

new pricing policy for urea units as announced vide DoF‟s letter dated 30.1.2003,

there shall neither be any reimbursement of the investment made by a unit for

improvement in operations nor will there be any mopping up of gains of the units

as a result of operational efficiency. The fertilizer industry in the country will,

therefore, have to keep abreast of the state of the art technology in this regard.

IX. MECHANISM FOR COMPUTATION OF ESCALATION/DE-

ESCALATION

The ERC had recommended that escalations/de-escalations should be

given only in relation to main feedstock of the concerned group namely, gas,

naphtha, and FO/LSHS as the case may be. The ERC had also advocated that

escalations/de-escalations should be sanctioned based on import parity price of

naphtha and FO/LSHS. As has been pointed out earlier, the ERC had assumed

that the industry would be able to procure naphtha and FO/LSHS at import parity

price. This assumption has, however, not materialized.

The Committee noted that though the Government have decided to

dismantle the Administered Price Mechanism (APM) for the petroleum sector, the

decision has not been fully implemented in as much as the price of natural gas

still continues to be administered by the Government. Further, though the price of

naphtha and FO/LSHS is determined on the basis of import parity based formula,

there are substantial differences of perception between the fertilizer industry and

the supplying oil companies over the nuances of pricing of naphtha. Attempts

made in the past by the Ministry of Petroleum & Natural Gas to resolve the

matter in consultation with the other concerned Ministries have not borne fruit so

far. In fact, it is understood that the Ministry of P & NG have taken the stand that

fertilizer companies should deal directly with oil companies with regard to pricing

of naphtha and that after the dismantling of the APM, the Ministry would not

intervene in the matter. Of now, the oil companies are determining the price of

naphtha and FO/LSHS on their own and communicating the same to the

concerned fertilizer units. In the absence of a full-fledged regulator for the

petroleum sector as yet, it would not be possible to determine the disputes

between the two parties on the pricing methodology unless Government chooses

to intervene or there is judicial adjudication.

In view of the above, the Committee feels that there is no level playing

field for the fertilizer industry vis-à-vis the suppliers of naphtha and FO/LSHS

who have so far not been willing to permit the fertilizer industry to make use of

their infrastructure for import of naphtha and FO/LSHS. Therefore, the

Committee does not recommend escalations/de-escalations on the basis of

import parity price in respect of naphtha and FO/LSHS.

The Committee also explored the possibility of using Wholesale Price

Index (WPI), for naphtha for purposes of escalation/de-escalation. It, however,

found that the application of the formula based on WPI would at times, result in

large overpayment to some units and at other times, in significant

underpayment. The methodology for computation of WPI was discussed at

length with Economic Advisor of the Ministry of Industry, who agreed that there

was scope for further improvement in the computation of the index so that it may

reflect the variations in the price of naphtha and FO/LSHS in a more realistic

manner. Similar problems exist when the WPI is sought to be applied to other

feedstock/fuel. As the fine-tuning of WPI would take some time, the Committee

does not find it possible to place any reliance on this index for according

escalation/de-escalation in the price of naphtha/FO/LSHS in the immediate

future.

In view of this, the Committee recommends that escalation/de-

escalation in respect of feedstock/fuel should be determined on the basis

of existing methodology followed by the FICC for the first year of Stage-II.

It should be possible to take a final decision with regard to the formula for

escalation/de-escalation based either on import parity price or the refined

Wholesale Price Index before the end of the first year of Stage-II. The

Committee is of the view that the option of indexing to the import parity price

(FOB) should not be ruled out as the prices of other feedstock/fuels are fixed

largely on import parity pricing principle and the petroleum sector cannot be

insulated from the international economy beyond a certain period. Even the

price of indigenous natural gas which is administered by Government now is

proposed to be linked to market/international prices. The Committee is of the

view that the methodology recommended by it requires constant monitoring. The

methodology based either on import parity pricing formula, after such

modifications as may become necessary in the light of the policy decisions to be

taken by the Government on the pricing of natural gas, or the refined Wholesale

Price Index, may be more scientific and objective. The Government may take

appropriate decision on this after an in-depth study of the matter. The formula

given by the Committee, thus, is purely an interim one.

Accordingly, the Committee recommends that for the 1st year in Stage-

II, the formula for escalation/de-escalation in the price of feedstock/fuel be

determined as follows:

(i) (a) Escalation/De-escalation on variable cost should be worked

out based on specific energy consumption of the group.

(b) Escalation/De-escalation should be calculated on quarterly

basis.

(c) The sales tax on inputs should be calculated and paid

separately to each unit on actual basis.

(d) Escalation/De-escalation is to be calculated for each unit in

respect of variation in the prices of some components of the

variable cost namely feedstock, fuel and purchased power only.

(ii) Escalation/De-escalation for variation in the cost of inputs:

a) Escalation/De-escalation factor

Escalation/De-escalation factor (Rs./MT urea) = A x ( C – B )

A = Base weighted average specific energy consumption of the group (Gcal/MT

of Urea)

B = Base rate of energy for the unit (Rs/Gcal)

C = Actual rate of energy for the unit (Rs/Gcal)

b) Rate of energy (Rs/Gcal)

Base rate of energy (B) and actual rate of energy (C) for the unit shall be

calculated from the base data (base energy, actual mix of raw materials and

base/actual rates) as shown below:

Input Base

percent

mix of

input, %

Actual

percent

mix of

input,%

Base rate

of input

(Rs/Gcal)

Actual

rate of

input

(Rs/Gcal)

Base rate

of energy

(Rs/Gcal)

Actual

rate of

energy

(Rs/Gcal)

a b c d e =

(axc)/100

f =

(bxd)/100

NG

Naphtha

Fuel Oil

Coal

Purchased power

Total B C

c) Calculation of Escalation/ De-escalation

i) Base/ Actual rate of energy for the quarter shall be calculated for each

unit.

ii) Escalation/De-escalation factor shall then be calculated as Rs/MT

urea separately for each unit.

X. SWITCHOVER OF NON-GAS BASED UNITS TO GAS/LNG IN STAGE-

III

It has been envisaged by ERC that all the non-gas based plants shall

modernize and switchover to LNG by end of Stage-II. The terms of reference of

the Committee included suggesting a method for working out the differential cost

of feedstock for non-gas based units after Stage-II. Furthermore, the likely

scenario of the availability, pricing and infrastructure for LNG was also to be

considered by the Committee.

LNG is likely to become available in a phased manner depending upon the

infrastructure for distribution of LNG, plant technology and geographical location

of the urea units. However, the scenario about availability and pricing of LNG is

not very clear at present. In the discussions held with fertilizer industry and FAI, it

was revealed that there was no appreciable progress with regard to supply and

availability of LNG in the country and that a clear picture may emerge by year

2006. The representatives of some of the pre-1992 naphtha based as well as

FO/LSHS based urea units expressed the view that even if LNG becomes

available, switchover to LNG may not necessarily be a cheaper option

considering the initial heavy capital investment as well as the supply prices

indicated by the prospective suppliers of LNG.

The projection made by the Ministry of P&NG with regard to the supply

and demand for petroleum products and natural gas indicate that while the

surplus availability of naphtha may increase from 1.0 MMT to 4.1 MMT during the

10th Plan Period, the deficit in respect of FO/LSHS may increase from 0.5 MMT

to 5.6 MMT. In so far as LNG is concerned, the projections reveal that 3 to 4

LNG terminals, those at Dabhol, Dahej and Hazira are under construction, out of

15 which have been sanctioned, and the one at Cochin can be considered to

belong to the mature category. The Dabhol terminal is expected to commence

market gas sales from 2004-05 onwards. The other terminals appear to be

doubtful starters. On the assumption that 3 to 4 terminals will get commissioned

during the 10th Plan Period, it has been assessed that the overall potential for

imports of LNG would be in the range of 40 to 50 MMSCMD by the terminal year

of the 10th Plan. An important observation made by the Ministry of P&NG is as

follows:

“The critical requirement of successful implementation of LNG projects is

the identification and aggregation of linked bankable projects which can pay for

expensive LNG on long term basis. Hence, existence of a robust market is a

pre-requisite for LNG imports. In India, since power sector would be the anchor

market for LNG terminals, the present structure and pricing/tariff of the Indian

electricity sector may have dampened the efforts to create new power generation

capacity and thereby the demand for fuel. Under this scenario the outlook for

various LNG initiatives at this stage is difficult to establish”.

(Source: Para 8.5.8 of „Report of the Working Group on Petroleum and Natural Gas for the Tenth Five Year Plan, Government of India, Planning Commission‟)

The projected demand-supply position of natural gas at the end of the 10th

Plan almost balances at the level of supplies in the range of 140-145 MMSCMD

which are inclusive of LNG supplies (50 MMSCMD) and commencement of the

pipeline gas imports (10 MMSCMD). Further, most of the incremental domestic

supplies are expected, not from ONGC and OIL, but from the fields/discoveries of

private and joint venture companies.

There are recent reports about discoveries of large reserves of natural gas

in the Godavari basin, but their authenticity is not yet known. It is possibly in

view of the above that the Govt. of India O.M. on pricing policy for urea units

dated 30.1.2003 stipulates that the modalities of Stage-III would be worked out

after review of the implementation of Stage-I and Stage-II. The Committee is of

the view that the Government should announce the broad features of the policy

for the Stage-III at the earliest, as the industry, especially the FO/LSHS based

units, have to make substantial capital investment, if they decide to switch over to

LNG. While the construction of LNG terminals would no doubt be a critical factor,

bankable projects for LNG would be an important pre-requisite for LNG imports

for which the initiative has to come from the industry. However, the industry can

legitimately expect the announcement of the policy well in time to enable it to

take such initiative. The assumption with regard to imports of natural gas through

the pipeline may not materialize.

It is, therefore, suggested that the Government may announce its

policy for the Stage-III by 1.1.2004, by which time a clear picture should

emerge about availability, pricing etc. of LNG/NG, so that the industry may

initiate necessary steps to come up with bankable projects, based on its

commercial judgment.

It is not clear as to why the power sector is considered to be anchor

market for LNG by the Ministry of Petroleum & Natural Gas. The fertilizer sector

too, is an important player. It would be advisable to ascertain the logic behind this

perception and see that the fertilizer industry‟s case does not go by default.

XI. ENERGY LEVEL BENCHMARKING (BEYOND STAGE-II)

In fixing the preset energy level for each group for Stage-II, the Committee

has considered the weighted average group energy consumption level (excluding

outliers) arrived at on the basis of the actual operating data of the urea units in

each group pertaining to the last three years (i.e., 1999-2000 to 2001-02). For

benchmarking, it is recommended that the lowest weighted average energy

consumption level attained by a urea unit in each group in the above 3 years‟ be

considered as target energy norm beyond Stage-II for all the units in that group.

The Committee recommends that the urea industry should aspire to achieve

these target energy figures as a benchmark of efficiency. However, the benefits

that accrue to the urea units as a result of higher efficiency due to capital

investment should not be mopped up and the urea units in each group should

continue to get the concession rates based upon the energy norms fixed for the

group under Stage-II.

To achieve the benchmark energy norms, the existing urea units will have

to carry out extensive modification/revamp involving considerable investments

and import of equipment. The Committee notes that the new policy of the

Government allows the industry to retain the gains in operational efficiency that

accrue to the units due to capital investments etc. This should enable the units to

attain the most efficient energy consumption level attained by a urea unit in each

group in the three years‟ considered above.

It was brought to the notice of the Committee that financial institutions are

unwilling to entertain proposals for substantial capital investments in the fertilizer

industry in the absence of clear-cut and well-defined long term policy for the

fertilizer sector. The Committee would urge the Government to come out with

such a policy at the earliest.

The Committee recommends following target energy figures beyond

Stage-II for each group:

Group Lowest energy in the group (3 years’

weighted average energy consumption excluding outliers)

(Gcal/MT urea)

Target Energy levels recommended (Gcal/MT urea)

Group-I 5.83935 5.84

Group-II 5.49325 5.49

Group-IIIA 7.35303 7.35

Group-IIIB 5.81048 5.81

Group-IV 9.96856 9.97

Group-V 6.71407 6.71

The targets recommended above are in the nature of milestones to be

reached at the end of Stage-II. However, in view of the Government‟s decision

neither to take cognizance of capital investments made by the units nor to mop

up the gains that accrue to them from such investments, the targets may appear

to be irrelevant.

On the relevance or propriety of indicating these targets, it could be stated

that these are relevant in the larger macro-economic context and especially in

view of the increasing importance being attached to the conservation and

efficient use of energy in the country. In fact, very recently, the Energy

Conservation Act, 2001 (No. 52 of 2001) has come into force.

The Energy Conservation Act, 2001 is relevant for the fertilizer industry on

account of the following provisions it contains:

(i) The fertilizer industry is included in the schedule appended to the

Act, which gives the list of energy intensive industries and other

establishments specified as “designated consumers”.

(ii) The Central Government shall appoint the Bureau of Energy

Efficiency by a notification which will act as the eyes and ears of the

Central Government and enable the latter to discharge its

responsibilities under the Act.

(iii) The Central Government is authorized inter-alia, under the Act

(a) to establish and prescribe such energy consumption norms and

standards for different designated consumers having regard to

such factors as may be prescribed (Section 14-g),

(b) to direct the energy intensive industries included in the

schedule to get energy audit conducted by an accredited

energy auditor in such manner and intervals of time as may be

specified by regulation (Section 14-h),

(c) to direct any designated consumer to furnish to the designated

agency (any agency designated to coordinate, regulate and

enforce provisions of the Act within the concerned State) the

information with regard to energy consumed and action taken

on the recommendation of the accredited energy auditor, and,

(d) to direct any designated consumer to designate or appoint

energy manager in-charge of activities for efficient use of

energy and its conservation and also submit a report at the end

of the financial year to the designated agency.

The fertilizer industry would therefore, be very much subjected to the

directions and control of the Central Government in matters relating to energy

conservation and efficient use of energy. The targets that have been indicated

would therefore be relevant as milestones on the road to achieve the national

goal of energy conservation, notwithstanding the treatment these may receive

under the pricing formula.

XII. RECOMMENDATIONS

To recapitulate in a nutshell, the Committee recommends the following:

a) Stages

The Committee has considered the following stages for its

recommendations:

I. Stage-I – 1.4.2003 to 31.3.2004

II. Stage-II – 1.4.2004 to 31.3.2006

III. Stage-III – 1.4.2006 onwards.

b) Grouping of Plants

Existing urea units shall be grouped into the following six groups based on

feedstock and vintage:

i) Pre - 92 Gas based plants

ii) Post - 92 Gas based plants

iii) Pre - 92 Naphtha based plants

iv) Post -92 Naphtha based plants

v) FO/LSHS based plants

vi) Mixed Energy based plants

In case consumption of alternative feedstock/fuel in a gas based unit

exceeds 25%, the classification of the unit should be shifted from gas based to

the mixed energy group until the mix again changes warranting its inclusion in

the gas based group. Likewise, the classification of a unit in the mixed energy

group may also undergo similar change. This exercise should be undertaken on

an annual basis.

c) Pre-set Energy Levels for Stage-I

No recommendations on any efficiency norms for various groups during

this Stage are made. The FICC should calculate escalation/de-escalation in the

variable cost for all the urea units for Stage-I on the pattern of the current

practice under RPS.

d) Pre-set Energy Levels for Stage-II

The following pre-set energy levels at Stage-II for each group have been

recommended based on weighted average group consumption figures of energy

(excluding outliers) for the last 3 years (i.e., 1999-2000 to 2001-02):

Group Energy

levels for

Stage-II

(Gcal/MT

Urea)

Group-I 6.07

Group-II 5.80

Group-IIIA 7.77

Group-IIIB 6.21

Group-IV 10.07

Group-V 7.10

For outlier plants on the higher side in the relevant groups, the Committee

recommends a separate treatment for the first year of Stage-II (i.e., 1.4.2004 to

31.3.2005) in order to prepare them to attain the efficiency driven group energy

consumption norms. It is therefore, recommended that the specific energy

consumption norms for these outlier plants for the first year of Stage-II should be

the same as considered by the FICC in respect of these units for the 8th pricing

period and thereafter respective group energy norms would be made applicable

in respect of these outlier units also. However, the specific energy consumption

norm for both the years of Stage-II for GNFC, Bharuch, which is an outlier on the

lower side in the FO/LSHS group, should be the same as considered by the

FICC for the 8th pricing period in order to avoid any undue gain to it in adopting

the principle of group energy consumption norm for the outlier plants in the

second year of Stage-II.

The concession rates for the urea units for Stage-II may be reworked by

the FICC taking into account the recommended pre-set energy norms for Stage-

II. In order to reward efficiency in energy consumption as also to offer incentive

to all urea units to attain the pre-set levels of energy consumption in each group

during Stage-II, the pre-set group energy consumption norms may be taken for

all the urea units in the group, excluding the outliers (which have been dealt with

in the preceding paragraph) irrespective of their individual energy consumption

level, for working out base concession for Stage-II as well as for escalation/de-

escalation.

e) Raw material mix of inputs

The recommendations are as follows:

(i) In case of three plants in group-IIIA, namely, SFC-Kota,

IFFCO-Phulpur-I and DIL-Kanpur, their energy consumption

and raw material mix as recognized for 8th pricing period

should continue to be recognized even in Stage-II so that

these units do not suffer either undue loss or get undue

benefit;

(ii) In respect of other units in group III A as well as all units in

other groups, within the recommended group energy

consumption norm, the actual raw material mix of each unit

should be taken while working out base concession as well

as escalation/de-escalation. Any change in the raw material

mix of each unit should be continuously monitored by the

FICC and adjusted on annual basis.

f) Mechanism For Computation Of Escalation/ De-escalation

Escalation/de-escalation in respect of variation in the prices of some

components of the variable cost namely feedstock, fuel and purchased power

only may be worked out based on pre-set specific energy consumption of the

group on a quarterly basis and should be linked to the actual cost, of inputs net of

sales tax, for each unit for first year of Stage-II. The sales tax on inputs should be

calculated and paid separately to each unit on actual basis.

The Committee recommends that escalation/de-escalation in

respect of feedstock/fuel should be determined on the basis of existing

methodology followed by the FICC for the first year of Stage-II. The

Committee feels that it should be possible to take a final decision with

regard to the formula for escalation/de-escalation based either on import

parity price or the refined Wholesale Price Index before the end of the first

year of Stage-II and the Government may accordingly take appropriate

decision on this after in-depth study of the matter.

g) Switchover of non-gas based units to Gas/LNG in Stage-III The Committee does not have any specific recommendation to make

about Stage-III because of the uncertainty prevailing about availability, pricing

etc. of LNG/NG. It is suggested that the Government may announce its policy for

Stage-III by 1.1.2004, by which time a clear picture should emerge about

availability, pricing etc. of LNG/NG so that the industry may initiate necessary

steps to come up with bankable projects, based on its commercial judgment.

h) Energy Level Benchmarking (Beyond Stage-II)

The lowest weighted average energy consumption level attained by a

urea unit in each group in the 3 year period i.e., 1999-2000 to 2001-02 be

considered as target energy norm beyond Stage-II for all the units in that group.

The Committee recommends that the urea industry should aspire to achieve

these target energy figures as a benchmark of efficiency. However, the benefits

that accrue to the urea units as a result of higher efficiency due to capital

investment shall not be mopped up and the urea units in each group should

continue to get the energy figures fixed for the group under Stage-II.

The Committee recommends following target energy figures beyond

Stage-II for each group:

Group Target Energy levels (Gcal/MT urea)

Group-I 5.84

Group-II 5.49

Group-IIIA 7.35

Group-IIIB 5.81

Group-IV 9.97

Group-V 6.71

The Committee feels that these targets are relevant as milestones to

achieving the national goal of energy conservation as enshrined in the Energy

Conservation Act, 2001.

i) General Recommendation

Whereas, the Committee has taken every care to analyze the various

issues related to its terms of reference, it realizes that the calculation of

concession to be paid to the urea units in different groups during Stages-I and II

is a complex exercise and may involve consideration and calculation of

innumerable factors which it has not been possible to cover in this Report. It is,

therefore, suggested that in case of any anomaly or any calculation not

specifically recommended in or covered by the Report, the FICC, in consultation

with the Department of Fertilizers may take appropriate decision in the matter.

(Pratap Narayan) (C. Ramaswamy) (G.B. Purohit)

Member Member Member

(V.K. Bali) (R.N.Choubey) (Manoj Kumar)

Member Member Member Secretary

(A.V. Gokak)

Chairman

***

Chairman’s comments on certain issues raised by two members

I have gone through the dissenting note (enclosed), which was received

on 2nd May, 2003 from Shri R.N. Choube, who was earlier a member of the

Committee, in his capacity as Joint Secretary (Plan Finance-II), Department of

Expenditure. It may be emphasized that the draft report of the Committee was

circulated to the members earlier on 31.1.2003, much in advance of the next

meeting on 14.2.2003 and the last meeting on 12th March., 2003. Neither any

written comments were received nor was the meeting attended by Shri R.N.

Choubey or his successor. I wish either Shri Choube or his successor had

attended the meeting as it would have facilitated a better appreciation of every

body‟s point of view at the final stage of deliberations. I have given careful

consideration to the points raised by Shri Choube. In fact, most of the points

raised by him were discussed in the course of the Committee‟s deliberations.

The basic thrust of Shri Choube‟s note appears to be that if actual

consumption is below the norms proposed by the Committee, the actuals should

be recognized as otherwise it would lead to inefficiency and no reduction in

subsidy due to unintended benefit accruing to such units. I would like to deal with

this major issue first before dealing with the specific points raised in his note.

In this context, the merits and demerits of pricing, based on both

normative basis or actual cost basis have to be considered. The former has the

advantage of increasing efficiency as any improvement over norm improves

profitability, and discouraging inefficient performance, as the same results in

lower profitability or even loss. Pricing on actual cost basis, however, does not

offer any incentive for improved performance (as gains get mopped up) nor

discourages inefficient performance due to recognition of actual cost. The

concept of recognizing norm or actual, whichever is lower, conveys a wrong

signal to the units that it does not pay to improve performance. Even ERC, which

brought in the Group Pricing Concept, recommended a common norm for its

calculation and did not envisage recognition of actual or norm, whichever is

lower. In a normative system, it is inherent that once the norm is fixed on a

reasonable efficiency level, more efficient units are rewarded by better

profitability while inefficient units are penalized by way of lower profitability or

even loss.

Another important consideration is that, under normative pricing

mechanism, it has to be taken as a package; while there may be advantage

under certain items, there is also disadvantage under certain other items and the

loss and gain have to be taken together. If only gain under certain items is taken,

ignoring loss under certain other items, it renders administered pricing

mechanism irrational and un-remunerative to the industry.

The points raised above become all the more relevant when a conscious

effort is made to move away from individual unit based retention pricing scheme

to a group pricing scheme. On this major issue, I have not been able to

pursuade myself to the point of view expressed by Shri Choube.

I now come to the specific points raised by Shri Choube.

(I) Annual Review of Consumption Pattern:

Shri Choube has opposed the recommendation of the Committee to

annually review the placement of an individual unit in a particular group

depending upon change in consumption pattern. This recommendation has been

misunderstood by him. It is well known that that due to inadequate availability of

gas, plants in Groups I, II and V (Pre-92 and Post-92 gas based and mixed

energy group plants) are required to use alternative feed and fuel like Naphtha;

and the pattern of usage changes from year to year. Naphtha energy is four

times costlier than energy through gas. If a gas based plant does not get

adequate supply in the event of shortage of gas, and its usage of naphtha goes

up beyond 25% (which has been taken as a cut off level for classification of

plants as gas based or mixed feed), it would seriously jeopardize the viability of

such a unit by continuing it in the gas based group. Conversely, if increasing gas

supply is available to a mixed feed plant, and its usage of naphtha goes below

25%, it would get undue gains if it continues to be classified as a mixed feed

plant.

This point is well illustrated by NFCL-II case. It was commissioned as a

naphtha based plant and was also treated as such by ERC in its grouping.

However, due to subsequent higher availability of gas, increasing gas quantities

have been used and, therefore, the Committee has included it under group II

(Post-92 gas based plant). But there is yet no long term commitment of gas for

this plant; the present availability is mainly due to default of other users in their

off-take of allocated gas. If the situation reverses, the Committee considers it

appropriate to take it back to the mixed feed stock group so that the unit does not

suffer unintended loss.

Similarly, when LNG becomes available, it is likely that some naphtha

based units may change over to LNG. At that stage, such units will neither fit in

naphtha nor gas group because of differential capital as well as variable cost

structure and it may be necessary, to put such plants in a separate group

depending upon vintage.

The Committee, therefore, considers it appropriate to make a provision for

annual review so that neither the units suffer unintended loss nor get unintended

profit due to changing pattern of gas availability.

(II) Validation of Data by Government:

As regards the need for validation of the data by the Government, I would

like to emphasize that the entire data collected by the Committee was through

Department of Fertilizers. ED, FICC and Joint Advisor, Department of Fertilizers

have also been associated with the Committee as special invitees from the very

beginning. The relevant data has been with us for over eight months and neither

DOF nor FICC has pointed out any inaccuracy and the Committee cannot be

expected to make its recommendations on doubtful data.

Nonetheless, the Committee itself has, at the end of part IV(C) noted that

“the basic figures as also conversion calculations in Gcal of energy as given by

each urea unit are liable to be scrutinized by the Government at its own level”

(III) Regarding Outliers:

While Shri Choube has agreed to the exclusion, as outliers, of units having

energy consumption higher than 20% over the weighted average for the group in

recommending the norm, he has opposed exclusion of GNFC in Group IV whose

energy consumption is lower by more that 20% than the weighted group average.

The concept of excluding „outliers‟ is to ensure that too high or too low

consumption does not vitiate a reasonable norm determination. Consistency

demands that either, the weighted average of all units can be taken or all

„outliers‟ having too low or too high consumption be excluded.

That apart, as has been pointed out in Note 5 at page 15 of the Report,

there are other reasons that justify treatment of GNFC as an outlier. There is

significant difference in the size (offering benefit of economies of scale) in case of

Ammonia Plant (1350 TPD single stream) of GNFC as compared to other units

(900 TPD or lower) in the FO/LSHS Group. Further, the units included in the

Group have adopted technologies that were available at the relevant points of

time. GNFC uses Texaco process, which operates at a much higher pressure

while NFL and Sindri plants are based on Shell Gassification process which

operate at a lower pressure. Liquid oxygen is used in Texaco process against

compressed gaseous oxygen in shell process. These major technological

features result in significant differential energy usage in favour of GNFC. Hence,

inclusion of a unit having extremely low consumption in working out the Group

norm would have rendered it totally unrealistic not capable of achievement by

other units. Incidentally, this is in keeping with the new pricing scheme of the

Department of Fertilizers, under which units whose retention prices deviate by

plus minus 20% are treated as outliers while working out the group concessions.

However, to ensure that neither the outliers gain fortuitous benefit nor

suffer heavy loss, the Committee has recommended a transition period upto the

first year of Stage-II (giving them two years time) during which the existing norms

as under 7th and 8th pricing periods should continue as these are supposed to

have been fixed on a normative basis. From the second year of Stage-II, all units

are expected to fall in line with the recommended group-wise norm.

(IV) Taking best consumption of last three years as norm instead of three years’ weighted average:

Shri Choube is misinterpreting the Committee‟s rationale in taking 3 years

weighted average of energy consumption (excluding outliers) while

recommending the group norm. As has been clearly brought out in para VI, a

single year‟s data may not be true representative of a performance that can be

sustained over a long period as the same is influenced by internal as well as

external factors (some of which have been explained) and availability of

feedstock, particularly gas, is only one of the factors and not the only factor. The

analysis of the data revealed wide fluctuations from year to year as clearly

mentioned in this para. A perusal of the data presented in the Annexures will

show that the year in which the best weighted average consumption was

achieved does not necessarily mean that every plant in the group had the best

performance. For instance in case of Group-III A (pre-92 naphtha based plants),

the lowest average energy consumption was achieved in the year 2001-02, both

including and excluding outliers. However, out of 8 plants in the Group, in case of

5 plants the energy consumption in the preceding year (2000-01) was lower while

in case of only 3 plants it was lower during 2001-02 bringing down the weighted

average. That is why the Committee did not base its recommendations on a

single years performance, excluding outliers, but on three years performance so

that such fluctuations are evened out and realistic norms are fixed.

(V) Regarding adopting actual during 2002-03 or group norm, whichever is lower, in Stage-II:

Shri Choube has suggested that instead of adopting group consumption

norm for all the units excluding outliers recommended by the Committee, the

group energy norm or the actual achieved by the unit in 2002-03 (which, in any

case, is not relevant to the deliberations of Committee) whichever is lower,

should be adopted. I am afraid I am unable to agree to this approach for the

reasons already mentioned earlier in this note.

Apart from the dissenting note of Shri Choube, Shri Manoj Kumar,

Member Secretary of the Committee has pointed out that generally the benefit of

increased efficiency due to capital investment without mopping it up is given to

an industry when it has shown motivation and resolve to attain some pre-set

goals. In the present case, the Committee has taken this goal, for the period

beyond Stage-II, to be the energy consumption level fixed for Stage-II only. Now,

this energy consumption level for Stage-II itself is not a normative goal to be

achieved by all the urea units in any particular group for the simple reason that it

is the weighted average group energy consumption level (excluding outliers)

arrived at on the basis of the actual operating data of the urea units in each

group pertaining to the last three years. As such, there are many urea units

which are even today (on the basis of the energy consumption data of the last

year analyzed i.e. 2001-02) showing more efficient energy consumption than the

weighted average group energy consumption level fixed for Stage-II for the

period 1.4.2004 to 31.3.2006. To recommend that even beyond Stage-II (i.e.

beyond 31.3.2006), they should be given the group energy levels recommended

for Stage-II would not only be against the present ground realties but would also

result in extra financial gains to many units without making any extra efforts to be

more efficient than their performance in the year 2001-02.

Shri Manoj Kumar has further stated that the aim of recommending energy

efficiency norms for urea units and addressing allied issues under the New

Pricing Policy for urea units on the basis of the recommendations of the

Committee is not only to motivate urea units to increase their energy efficiency

and to become more competitive internationally but also to function in an

economic environment which results in a decrease in the subsidy burden on the

Government. Therefore, the target energy consumption level for the urea units

beyond Stage-II (i.e. beyond 31.3.2006) should be somewhat lower than the

mere adoption of the norms fixed for Stage-II. If the urea units are to be allowed

to retain the benefits of energy efficiency in this stage , then it should be only with

reference to further reduction in energy consumption than what has already been

achieved in 2001-02.

On the observations of Shri Manoj Kumar, the general reasons given at

the beginning of this note are applicable with equal force in this case also. Even

on merits, this does not present a complete picture. While it is true that some

units have already achieved lower energy consumption, than the norm

recommended by the Committee for Stage-II, it is also true that much higher

number of units have higher energy consumption than the norm. Also for Stage-

III and beyond, as many as 25 units out of 32 will have to improve their energy

efficiency to come up to the benchmark level recommended by the Committee.

This again will entail investment and that is why the Committee has

recommended continuation of energy norms of stage-II in stage-III onwards also

and at the same time non-recognition of investment. The following table will

clearly illustrate the loss/gain in respect of units in each group: -

Group Total no. Number of units with energy consumption Of units Above norm Above benchmark Recommended norm recommended

For stage-II for stage III onwards

I 6 4 5

II 7 4 6

III A 8 5 7

III B 2 1 1

IV 6 3 4

V 3 2 2

_________________________________________________

Total 32 19 25

In the circumstances, I would like to reiterate the recommendation that the

dispensation suggested for Stage-II (including in respect of consumption for 3

units in group III-A where the total energy cost is lower, as compared to other

units, despite higher energy consumption due to use of inefficient but cheaper

source of energy in the form of coal) should be continued in Stage-III also. This

would bring stability in the pricing mechanism and at the same time provide

strong incentive to the industry to further improve efficiency, serving the overall

national goal of energy conservation.

This apart, it is not correct to assume that a unit which has already

achieved the norm at the beginning of Stage-II will not strive to improve its

efficiency. Each unit will try to improve its competitive advantage in the aftermath

of the government‟s declared policy of lifting distribution controls initially and

eventually moving towards total decontrol. The policy of neither recognizing the

investment nor moping up the gain would also motivate the units to strive for

keeping their competitive advantage in tact. Moreover with the coming into force

of the Energy Conservation Act, 2001 the competent authority under that Act

would also ensure that the larger issue of energy efficiency is taken care of and

that no complacency creeps in, in the future.

The Committee has, after careful consideration, come to the conclusion

that at the present juncture, determination of norms at a level lower than those

recommended by the Committee would be beyond the realm of feasibility,

especially in view of the extremely heterogeneous nature of the industry and the

different technologies it has adopted.

Recommendations of Shri R.N. Choubey Joint Secretary (Plan Finance II), Department of Expenditure

(i) As far as the revision in the groups due to change in the feedstock

consumption pattern is concerned, there is no need to undertake it on

an annual basis, as proposed. The groupings may be reconsidered

only after the position of availability of gas improves considerably and

at that stage, groupings for the Group Based Concession Scheme as

well as these groupings would need to be reconsidered. That may

well be the stage III itself.

(ii) The entire data upon which the report is based needs to be validated

by Department of Fertilizer.

(iii) The proposed group energy norms for Stage II have been derived

through a statistical process. In this process the units whose

consumption norms are +/- 20% from the group-weighted average

have not been considered for calculation of group average.

Consumption norms are meant to promote efficiency. Leaving out

outliers i.e. those whose consumption is more than 20% of the group

average is agreed to. However, in Group IV i.e. FO/LSHS group,

GNFC has been treated as the outlier simply because its

consumption is on the lower side of the group average. Methodology

of treating units whose consumption norms are (-) 20% from the

group average as outlier is not acceptable. This will only promote

inefficiency.

(iv) The preset energy levels for State II have been fixed on the basis of

three years average excluding the outliers. The main argument for

doing so is non-availability of gas. The gas scenario has not

changed appreciably during the last couple of years. The position of

shortage has been there for the past few years. Therefore, non-

availability of gas cannot be a ground for taking up three years

average as consumption norm. Most of the units have shown an

improvement in the past few years in the consumption norms. An

averaging of three years negates this advantage and thus increases

the subsidy burden. Taking up three year‟s average amounts to

building inefficiency into the norms. As an alternative the best

consumption of the last three years may be taken as consumption

norm for Stage II.

(v) It has been recommended that the group norm may be applied for all

the units in the group irrespective of their individual energy

consumption levels. This gives an unearned benefit to those units

who are already below the group energy norm. It is suggested that

the group energy norm or the norm attained by the company during

the year 2002-03 whichever is lower would be made applicable and

should continue till group norms are reviewed again. This would take

away unearned benefits that a company might earn, at the same time

it would permit a company to keep its efficiency gains.

Annexure-I Executive Summary

Background and Objectives 1. Fertilizer subsidies have grown dramatically and continue to increase rapidly.

The green revolution technology is now widely accepted and the need to

subsidize fertilizers to induce farmers to increase their usage has gone down.

2. The Retention Price Scheme (RPS) has led to the development of a large

domestic industry and near self-sufficiency. However, the unit wise RPS is a cost

plus scheme. It results in high cost fertilizers, excess payments to industry and

provides no incentives to be cost efficient. Moreover, it is extremely difficult, if not

impossible, to administer it without these disadvantages.

3. The fertilizer policy needs to be reformed. The goal of new policy should be to

eventually bring fertilizer prices charged to farmers to the level of import parity

price. It should protect small farmers‟ real incomes, should not lead to a slump in

food production and promote a balanced use of N, P and K. At the same time,

the RPS needs to be dismantled and replaced by an easily enforceable system

that provides incentives to manufacturers to be cost efficient, and ensures a

desired level of self-sufficiency with minimal support from the government.

4. A sudden increase in farm-gate price of urea to import parity price, without

increasing procurement prices, could lead to a fall of 13.5 million tonnes of

foodgrains production. This is thus, not a feasible option.

Protecting Small farmers 5. If procurement prices are raised along with farm-gate prices of fertilizers, the

fall would be much smaller. However, small and marginal farmers for whom self

consumption is a large part of their output, would suffer a loss in their real

incomes.

They should be protected. Two possible ways are:

(a) Introduction of a dual price scheme under which all cultivator households

are given 120 Kgs. of fertilizers at subsidized prices and

(b) Expansion of Employment Guarantee Scheme and rural works programmes

to provide additional incomes to small farmers. If such rural programmes are

directed towards improvement of land and development of minor irrigation

schemes, they will in addition to providing wage income, increase productivity of

land and income to farmers even when fertilizer prices are increased.

From RPS to Competitive Self-reliance Urea 7. A complete decontrol of producer price for urea would have been possible,

were all our plants based on natural gas as feedstock. Unfortunately, only 56

percent of domestic capacity is gas based, 22 percent naphtha based, 9 percent

fuel oil based and 12 percent is mixed feedstock based mostly naphtha and

natural gas.

8. A sudden freeing of the urea industry could lead to most naphtha based units

having to close down, as even their short run variable costs would be higher than

the import price. The resultant surge in the demand for imports would push up

import prices to levels which would lead to much higher quantum of subsidy than

now, if the demand is to be maintained at 21 million tonnes of urea.

9. Since availability of natural gas is limited, a good proportion of the production

has to be based on other feedstock if a certain level of self-sufficiency is to be

maintained. These plants would have to be compensated for their higher cost of

feedstock.

10. The best possible alternative at present is imported liquefied natural gas

(LNG).

11. In the circumstances, the Commission recommends the dismantling of the

control system in a phased manner, leading at the commencement of fourth

stage, to a decontrolled fertilizer industry which can compete with import albeit

with a small level of protection and a feedstock cost differential compensation to

naphtha/LNG based units to ensure self-sufficiency. The scheme envisaged is in

the spirit of the recommendations of the HPRC. The transition however has to be

gradual.

12. The transition begins with the discontinuation of the RPS with effect from

February 1, 2001, and introduction of a group-wise concession scheme. The

number of groups is reduced from five to two by April 1, 2006. At this stage all

units except those that are based on naphtha/LNG would be viable at a price of

about Rs. 7000 per tonne of urea. For naphtha/LNG based units a Feedstock

Differential Cost Reimbursement (FDCR) of Rs. 1900 per tonne of urea will be

given. The details of the various stages are as follows:

(i) In the first phase beginning February 1, 2001, the following will be done:

(a) The existing units will be grouped into 5 categories – pre-1992 gas based

units, post 1992 gas based units, naphtha based units, FO/LSHS based units

and mixed feedstock units. The individual retention price scheme will be

scrapped and in its place a Urea Concession Scheme with a fixed amount of

concession for each of these groups will be introduced. At the same time, plants

would be free to get feed stock from wherever they want including imports.

(b) The distribution control mechanism will be done away with.

(c) The maximum retail price arrangement will be continued, the concessions for

each group being so calibrated as to enable the units to sell at the stipulated

maximum retail price.

(d) Having regard to the large fluctuations in the import prices of feedstocks, it

will be necessary to redetermine the concession to these groups of units every

three months with reference to the prevailing import prices. When there is a

reduction in the import parity prices of these feedstocks, the concession payable

to the units would go down. It may be noted that this, however, is done only

group-wise and not plant-wise. Whenever there is an increase in the import parity

prices of these feedstocks, the additional costs should be passed on to the

consumers through a suitable increase in the maximum retail price so that the

total amount payable by way of concessions does not go up significantly. The

revision in issue price to farmers however, should be done every season rather

than every three months.

(ii). In the second stage, beginning 1st April 2002, the concessions are reduced

to reflect the possibility of reasonable improvement in feedstock usage

efficiencies and reduction in capital related charges.

(iii). The third phase will begin on 1st April 2005 and reflects the feasibility of all

non gas based plants to modernize and switch-over to LNG. For plants which do

not switch over to LNG as feedstock only the level of concession that the unit

would have been entitled to if it had switched over to LNG would be allowed.

(iv). The fourth phase begins on 1.4.2006 when the industry is decontrolled. The

Commission recommends a 7 % increase in the price of urea in real terms every

year from 1.4.2001. This way the open market price will reach Rs. 6903 by

1.4.2006, a level at which the industry can be freed from all controls and be

required to compete with imports, with variable levy ensuring availability of such

imports at the farm-gate at Rs. 7000 per tonne of urea. While no concessions will

be necessary from this date onwards for gas based, FO/LSHS and mixed feed

stock plants, existing naphtha plants converting to LNG as also new plants and

substantial additions to existing plants will be entitled to a feedstock differential

with that for LNG plants serving as a ceiling.

13. The schedule of concessions are shown in the Table 1:

Table 1 : Schedule of concessions

Feedstock Ist Stage concession (Rs./MT)

IInd Stage

IIIrd Stage

IVth Stage

Based on existing RPS and domestic Price of Inputs

Savings at

import Parity Price

Net concession 1.2.2001 to 31.3.2002

1.4.2002 to

31.3.2005

(Rs./MT)

1.4.2005 to

31.3.2006

from 1.4.2006

1. 2. 3. 4. 5. 6.

Natural

Gas Pre 1992

Post 1992

Naphtha

FO/LSHS

Mixed

feed stock

1300

2900

8400

6400

4000

0

0

1900

3250

600

1300

2900

6500

3150

3400

1050

2450

5800

2200

3000

800

2000

3900

2200

2450

0

0

1900

0

0

New Plants : For non gas based new plants or substantial additions to existing plants would be given appropriate feedstock differential subject to the feedstock differential for LNG plants acting as the ceiling. Notes: (a) The concessions in column (1) are so determined that along with the net

receipt of Rs.4000 from the farm-gate price of Rs.4600, the concession gives

nearly the weighted average retention price to each group.

(b) Column (3) shows the savings that can result in stage I, if feedstocks are at

import parity prices. Freeing of imports will ensure that plants get feedstock at

such prices by February 1,2001.

(c) The reduction in column (4) compared to column (3) reflects change in

feedstock use efficiency in stage II. Modest achievable targets have been

assumed and plants are expected to attain them by 31st March, 2002.

(d) Column (5) reflects the concession in the third stage, incorporating the further

reduction on account of non gas based units switching over to LNG as feedstock.

(e) Column (6) reflects the concession, by way of feedstock differential only in the

fourth stage commencing 1.4.2006 when the industry is decontrolled and the

imports are made available at Rs.7000 per tonne at the farmgate.

(f) In all the three stages the final concession levels, as determined also take into

account the progressive reduction in capital recovery charges.

(g) The Commission has recommended a price increase of 7 % in real terms per

annum from 1.4.2001, reaching Rs.7000 on 1.4.2006. To the extent of price

increase in earlier years, the concession indicated in columns 3,4 and 5 would

stand reduced.

14. The schedule of subsidy outlay under various stages is given in Table 2. Table 2 : Urea subsidy outlay in different phases (Rs.Crores/year)

2000-01

2001-02

2002-05 2005-06 April 1, 2006 onwards

a) No increase in Issue price

Farm-gate price - Rs./mt of urea

4,600 4,600 4,600 4,600 4,600

Concession to industry

9,155 7,204 6,159 4,656 5,837

b) Increase in issue price @ 7 % p.a.

Farm-gate price - Rs./mt of urea

4,600 4,922 5,267 to 6030

6,452 7,000

Concession to industry (net)

9,155 6,556 4,817 to 3,280

927 1,004

c) Cost of coupon system :

Coupons to 105 million farmers At 80 Kgs. of urea per family to be supplied At Rs.4,600 per Mt

270 560 to 1201

1,556 2,016

Phosphatic and Potassic Fertilizers: 15. The farm-gate prices of nitrogenous, phosphatic and potassic fertilizers

should be set to promote a desired balance of fertilizer use. In the circumstances

the ERC will only suggest that once urea price is re-determined every six

months, the prices of potassic and phosphatic fertilizers should be suitably

adjusted, as advised by the Ministry of Agriculture to ensure the desired NPK

balance. It will be useful if government could announce in advance the formula to

be adopted for fixing the prices of P & K fertilizers with reference to a given urea

price.

16. Phosphatic fertilizers are already decontrolled and operated with a

concession scheme. With one more unit commissioned last year for the

manufacture of 1.5 million tonnes of DAP based on imported rock phosphate and

sulphur, the proportion of DAP manufactured, based on imported ammonia and

imported phosphoric acid will go down sharply. The appropriateness of

continuing with the present arrangement of giving a uniform rate of subsidy to all

the units, with reference to cost of production of DAP based on imported

ammonia and imported phosphoric acid needs to be examined preferably by the

Tariff Commission.

General 17. The arrangements for the payment of concessions to industrial/importing

firms need to be streamlined so as to ensure payment of the amounts due to the

units within three to four weeks from the time of sales. Once such arrangements

are in place, then in the case of urea also the payment of concessions could be

shifted from „despatch‟ to „sales‟.

18. As it is basically a question of dealing with industrial units – at least in the

case of DAP – these subsidies should appropriately be administered by the

Ministry of Chemicals and Fertilizers, along with the concessions for the urea

units. The Ministry of Agriculture will continue to have a major role in the fixation

of the maximum retail/indicative prices for all types of fertilizers, be it N or P or K.

19. The Commission recommends that if a state government imposes any

additional burden, by way of excessive levies on the inputs or on finished

fertilizers manufactured/sold in the state then these costs should be passed on to

the farmers in that state.

To Conclude:

20. The Commission wishes to emphasize that the suggested scheme to take the

fertilizer industry to a liberalized competitive set up :

- Retains self sufficiency - Preserves viability of existing units - Protects small farmers - Reduces subsidy outlay and - Is implementable.

Annexure-II-A No. 12019/14/2002-FPP-II

Government of India Ministry of Chemicals & Fertilizers

Department of Fertilizers ….

Shastri Bhawan, New Delhi 25th June, 2001.

Office Memorandum

Subject: Constitution of a Committee to examine the recommendations

made by the Expenditure Reforms Commission – regarding The Expenditure Reforms Commission (ERC), while recommending

Group Concession Scheme for urea manufacturing units, has envisaged

improvement in the energy efficiency in the Stage-II of the proposed scheme.

The report has indicated certain energy consumption norms for the non-gas

based units. The Department of Fertilizers, however, proposes to announce the

pre-set energy consumption norms for each Group, including the gas based

units. It has been decided to constitute a committee consisting of the following:

1. Shri A.V. Gokak, former Secretary, DOF, Chairman.

2. Shri Pratap Narain, former DG, FAI, Member

3. Shri Ramaswamy, former Chief Adviser, BICP Member

4. Shri V.K. Bali, ED(Tech.), IFFCO Member

5. Dr. G.B. Purohit, former Adviser (F), DOF Member

6. Shri M.R. Sharma, DS, DOF Member Secretary

2. The Committee will suggest efficient energy levels for the urea

manufacturing units keeping in view the existing norms and the norms which the

modern plants are expected to achieve. The Committee may also refer to the

energy consumption levels suggested by ERC. The Committee, while

recommending the energy levels, would also examine the desirability of

feedstock/technology based efficient energy levels and possible milestone in

terms of achieving international standards.

3. The Committee will suggest mechanism for determining the escalation

and de-escalation in the feedstock cost for various units/groups.

4. The Committee will suggest mechanism for feedstock differential cost in

respect of various non-gas based units after the Stage-II keeping in view the

likely scenario about availability, pricing and infrastructure required for the LNG.

5. The Committee will suggest the mechanism for treatment of substitution

of feedstock due to non-availability of gas/LNG etc.

6. The Committee will start functioning from 1.7.2002 and give its report by

31.8.2002.

7. A sitting fee of Rs. 1000/- per day will be paid to non-official members of

the Committee.

8. TA/DA will be regulated as per extant Government rules.

9. Secretariat assistance to the Committee will be provided by the

Department of Fertilizers. Shri S. Chandra, Joint Adviser, Department of

Fertilizers shall also be associated with the Committee for technical assistance.

11. This issues with the approval of Internal Finance Division vide their Dy.

No. C-190/FA/2002 dated 24.6.2002.

Sd/-

(Balvinder Kumar)

Joint Secretary to the Government of India

Tel: 23388481

Copy to:

1. All members of the Committee

2. Guard File

Copy also to:

1. PS to Minister (C&F)

2. PS to MOS(C&F)

3. Sr. PPS to Secretary (F)

4. ED, FICC

Annexure-II-B

No. 12019/14/2002-FPP-II Government of India

Ministry of Chemicals & Fertilizers Department of Fertilizers

…. Shastri Bhawan, New Delhi

28th August 2002

Office Memorandum Subject: Constitution of a Committee to examine the recommendations

made by the Expenditure Reforms Commission – regarding

In continuation of this Department‟s OM of even number dated 25.6.2002

constituting a Committee under the chairmanship of Shri A.V. Gokak, former

Secretary (Fertilizers), inter-alia to suggest efficient energy levels for urea units

during Stage-II of proposed Group Concession Scheme keeping in view ERC

recommendations, and the mechanism for determining the escalation and de-

escalation in the feedstock cost for various units/groups etc., Shri R.N. Choubey,

Joint Secretary (PF-II), Department of Expenditure, Ministry of Finance, is

nominated as member of the above-mentioned Committee with immediate effect.

-sd

(Manoj Kumar) Director

Copy to: 1. Shri A.V. Gokak, Former Secretary, Department of Fertilizers, 525-Meera Cottage, 11th Cross Rajmahal, Villas Extension, Sadashiv Nagar, Bangalore. 2. Shri Pratap Narayan, Former Director General, Fertilizer Association of India, 59-B, Friends Colony East, Western Avenue, New Delhi-110065. 3. Shri C. Ramaswamy, Former Chief Advisor, BICP, EA-28, SFS Flats, Maya Enclave, Hari Nagar, New Delhi.

4. Dr.G.B. Purohit, Former Advisor, Department of Fertilizers, N-25, D-Saket, New Delhi. 5. Shri V.K. Bali, Executive Director (Technical), Indian Farmers Fertiliser Cooperative Ltd., IFFCO House, 34, Nehru Place, New Delhi. 6. Shri R.N. Choubey, Joint Secretary (PF-II), Department of Expenditure, Ministry of Finance, North Block, New Delhi. 7. Shri Srichandra, Joint Adviser(F), DOF

Copy also to: 1. Shri C.S. Rao, Secretary, Department of Expenditure, Ministry of Finance, North block, New Delhi. 2. PS to M(C&F) 3. PS to MOS(C&F) 4. SrPPS to Secretary (F) 5. JS(F) 6. ED, FICC

-sd

(Manoj Kumar) Director

No. 12019/14/2002-FPP-II

Government of India Ministry of Chemicals & Fertilizers

Department of Fertilizers ….

Shastri Bhawan, New Delhi 24th March 2003

Office Memorandum

Subject: Constitution of a Committee to examine the recommendations made by the Expenditure Reforms Commission – regarding

In continuation of this Department‟s OM of even number dated 28.8.2002

nominating Shri R.N. Chaubey, the then Joint Secretary (PF-II), Department of

Expenditure, Ministry of Finance, as member of the Committee constituted under

the chairmanship of Shri A.V. Gokak, former Secretary (Fertilizers), inter-alia to

suggest efficient energy levels for urea units during Stage-II of proposed Group

Concession Scheme keeping in view ERC recommendations, and the

mechanism for determining the escalation and de-escalation in the feedstock

cost for various units/groups etc. and consequent upon Shri Chaubey‟s

appointment as Joint Secretary in the Finance Commission, Shri Vivek Rae, Joint

Secretary (PF-II), Department of Expenditure, Ministry of Finance, is nominated

as member of the above-mentioned Committee with immediate effect in place of

Shri R.N. Chaubey.

-sd (Manoj Kumar)

Director

Copy to:

1. Shri A.V. Gokak, Former Secretary, Department of Fertilizers, 525-Meera Cottage, 11th Cross Rajmahal, Villas Extension, Sadashiv Nagar, Bangalore.

2. Shri Pratap Narayan, Former Director General, Fertilizer Association of India, C-47, Friends Colony East, New Delhi-110065.

3. Shri C. Ramaswamy, Former Chief Advisor, BICP, EA-28, SFS Flats, Maya Enclave, Hari Nagar, New Delhi.

4. Dr.G.B. Purohit, Former Advisor, Department of Fertilizers, N-25, D-Saket, New Delhi.

5. Shri V.K. Bali, Executive Director (Technical), Indian Farmers Fertilizer Cooperative Ltd., IFFCO House, 34, Nehru Place, New Delhi.

6. Shri Vivek Ray, Joint Secretary (PF-II), Department of Expenditure, Ministry of Finance, North Block, New Delhi.

7. Shri R.N. Choubey, Joint Secretary, Finance Commission, Jawahar Vyapar Bhawan, Tolstoy Marg, New Delhi.

8. Shri Srichandra, Joint Adviser(F), DOF

Copy also to: 1. Shri C.S. Rao, Secretary, Department of Expenditure, Ministry of Finance, North block, New Delhi. 2. PS to M(C&F) 3. PS to MOS(C&F) 4. SrPPS to Secretary (F) 5. JS (F) 6. ED, FICC

-sd (Manoj Kumar)

Director

No. 12019/14/2002-FPP-II

Government of India Ministry of Chemicals & Fertilizers

Department of Fertilizers ….

Shastri Bhawan, New Delhi 1st April 2003

Office Memorandum

Subject: Constitution of a Committee to examine the recommendations

made by the Expenditure Reforms Commission – regarding

The undersigned is directed to refer to this Department‟s OM of even

number dated 25.6.2002 constituting a Committee under the chairmanship of

Shri A.V. Gokak, former Secretary (Fertilizers), inter-alia to suggest efficient

energy levels for urea units during Stage-II of the new pricing scheme keeping in

view the ERC recommendations, and the mechanism for determining the

escalation and de-escalation in the feedstock cost for various units/groups etc.,

and wherein Shri M.R. Sharma, Deputy Secretary was nominated as Member

Secretary. Since Shri M.R. Sharma was relieved of his duties in this Department

w.e.f 29.7.2002 consequent on his appointment as Private Secretary to the

Minister of State for Shipping, Shri Manoj Kumar, Director, will act as Member

Secretary to the Committee w.e.f 29.7.2002.

-sd (Manish Gupta)

Deputy Secretary

Copy to:

1. Shri A.V. Gokak, Former Secretary, Department of Fertilizers, 525-Meera Cottage, 11th Cross Rajmahal, Villas Extension, Sadashiv Nagar, Bangalore.

2. Shri Pratap Narayan, Former Director General, Fertilizer Association of

India, C-47, Friends Colony East, New Delhi-110065.

3. Shri C. Ramaswamy, Former Chief Advisor (Cost), Department of

Expenditure, EA-28, SFS Flats, Maya Enclave, Hari Nagar, New Delhi.

4. Dr.G.B. Purohit, Former Advisor, Department of Fertilizers, N-25, D-Saket, New Delhi.

5. Shri V.K. Bali, Executive Director (Technical), Indian Farmers Fertiliser

Cooperative Ltd., IFFCO House, 34, Nehru Place, New Delhi.

6. Shri Vivek Rae, Joint Secretary (PF-II), Department of Expenditure, Ministry of Finance, North Block, New Delhi.

7. Shri Srichandra, Joint Adviser(F), DOF.

8. Shri Manoj Kumar, Director, DOF.

Copy also to: 1. JS (F) 2. ED, FICC

-sd (Manish Gupta)

Deputy Secretary

Annexure-II-C No. 12019/5/98-FPP Government of India

Ministry of Chemicals & Fertilizers Department of Fertilizers

…

Shastri Bhawan, New Delhi. January 30, 2003

To,

The Executive Director, Fertilizer Industry Coordination Committee, 8th Floor, Sewa Bhawan, R.K. Puram, New Delhi.

Subject: Pricing policy for urea manufacturing units

Madam,

I am directed to say that the Government have approved a new pricing policy for urea

units which will replace the existing Retention Price Scheme and will come into effect from

1.4.2003. Salient features of the policy as also the modalities for implementation of the

Scheme are as follows:

1. The primary consideration and goal of the new pricing policy is to encourage efficiency

parameters of international standards based on the usage of the most efficient feedstock,

state-of-art technology and also ensure viable rate of return to the units. The new scheme will

come into effect from 1.4.2003 and will be implemented in stages. Stage-I would be of one

year duration, from 1.4.2003 to 31.3.2004. Stage-II would be of two years duration, from

1.4.2004 to 31.3.2006. The modalities of Stage-III would be decided by the Department of

Fertilizers (DOF) after review of the implementation of Stage-I and Stage-II.

2. There will be six groups based on vintage and feedstock for determining the group

based concession under the new Scheme, namely, pre-1992 gas based units, post-1992 gas

based units, pre-1992 naphtha based units, post-1992 naphtha based units, fuel oil/low

sulphur heavy stock (FO/LSHS) based units and mixed energy based units. The mixed energy

based group shall include such gas-based units that use alternative feedstock/fuel to the

extent of more than 25% as admissible on 1.4.2002. Classification of units among different

groups so determined shall remain unchanged during Stages-I and II.

3. During Stage-I, following measures would be put into effect:

3.1. Rates of concession for the units in each group to be determined in two steps. In Step-I,

the weighted average retention price and the dealer‟s margin of the units in the respective

group as applicable on 1.4.2002 would be computed. Units having exceptionally high or low

retention price, i.e. deviation of 20% and above with reference to group average computed in

Step-I are to be treated as outliers in their respective groups. In Step-2, the final weighted

average group retention price after excluding the outliers will be computed.

3.2. The group concession rate on 1.4.2003 would be computed on the data of the units on

31.3.2003 as applicable. To determine that, the retention prices as notified for the half year up

to 30.9.2002 would be taken as the base and the adjustment on the basis of 8th pricing period

for the remaining period, i.e. 1.10.2002 to 31.3.2003, shall be made before the end of financial

year 2003-2004.

3.3. Effective 1.4.2003, the units in each group would receive the concession after adjustment

on account of escalation/de-escalation in the variable cost related to changes in the price of

feedstock, fuel, purchased power and water. The modalities for this purpose will be worked out

by DOF for Stage-I and Stage-II on the basis of group energy data and efficient consumption

patterns of the units keeping in view the data of 8th pricing period.

3.4. Those units which have lower retention price than the weighted group average (estimated

after excluding the outliers as final group retention price) are to get the concession as per their

individual retention price. The remaining units (excluding outliers) are to get the concession

based upon the weighted group average retention price computed after excluding the outliers.

This basis would be valid for Stage-II also.

3.5. After commencement of Stage-I and also beyond Stage-II, there shall neither be any

reimbursement of the investment made by a unit for improvement in operations nor any

mopping up of gains of the units as a result of operational efficiency. The parameters outlined

in the new scheme shall be the inputs for computation of concession.

3.6. The outliers having a retention price higher than 20% or more from the group average in

their respective group would be granted an adjustment phase of one year, i.e. Stage-I. During

Stage-I, such outliers will get a rate of concession based upon the group weighted average

(after excluding outliers) and a structural adjustment which will be 50% of the difference

between their respective retention price and the group average computed as Step-II mentioned

in para 3.1.

3.7. Group concession rates will be calculated excluding the incidence of sales tax on inputs

which will be computed and compensated on the basis of rates effective on 1.4.2002 for each

unit. However, the compensation would be proportionately reduced if the rates are reduced by

any State.

4. During Stage-II, i.e. from 1.4.2004, the following measures shall be put into effect :

4.1. There will be no special treatment for the outliers and all the units will get the group rate

of concession as outlined earlier for Stage-I. The units having lower concession rate than the

group average shall continue to get the concession as per their individual concession rate. The

six groups would remain as in Stage-I.

4.2. The concession rates shall be adjusted for reduction in capital related charges. Further,

the group energy norms would be enforced on efficiency considerations. The Department of

Fertilizers would take into consideration the recommendations of the Gokak Committee in

determining the group energy norms. The scale of reduction on account of capital related

charges (CRC) would also be finalized by the Department of Fertilizers. Thus, the adjustments

on account of CRC and group energy norms effective in Stage-II would be made known to the

units so that they have reasonable time for making necessary technological and other

structural adjustments.

5. Under the new Scheme, there will be no capping on production of urea. The use or sale

of by-products such as ammonia, CO2 etc. will be permitted in case considered surplus

beyond the reassessed capacity for urea production. The final concession would be

determined on the reassessed installed capacity. The additional production beyond the

installed capacity would receive concession if it is mopped up under the ECA allocation. The

feedstock/fuel ratio for the entire production would be taken into consideration for assessing

the concession.

6. Phased decontrol of urea distribution/movement

6.1. In Stage-I, i.e. from 1.4.2003 to 31.3.2004, the allocation of urea under the Essential

Commodities Act 1955 (ECA) will be restricted up to 75% and 50% of installed capacity (as

reassessed) of each unit in Kharif 2003 and Rabi 2003-04, respectively. The Department will

be free to make necessary adjustments in determining ECA allocation in case the

estimated/actual production during the year is below the reassessed installed capacity. The

remaining urea production will be available to the manufacturers for sale to the farmers at MRP

anywhere in the country. Manufacturers will be entitled to sell urea to complex manufacturing

units on the principle of import parity price or to export, with the condition that no

subsidy/concession will be payable on that quantity and it will be computed towards the

quantity permitted for decontrolled sale. The DOF will reserve the authority to make suitable

adjustments, in view of demand-supply positions in the ECA allocation, and de-controlled urea

up to 15% over and above the reassessed installed capacity in case their applicable

concession rate is financially and economically efficient thereby contributing to reduce the

subsidy burden. During Stage-II, urea distribution will be totally decontrolled after having

evaluated the Stage-I and with the concurrence of the Ministry of Agriculture.

7. Freight

7.1. During 2003-04, equated freight will be worked out for the urea quantity under ECA

allocation on the basis of average normative lead and rail-road mix of each unit for the last

three years i.e. 2000-01, 2001-02 and 2002-03. Suitable adjustments will be granted in the

event of rail freight revision during the course of 2003-04. Secondary freight will remain the

same as fixed for the 8th pricing period. For the quantity outside ECA allocation, a reduction of

Rs. 100 PMT will be made from the equated freight. The same levels of payment will be made

in Stage-II as well. Regarding the road component of the primary freight, appropriate

adjustments will be made as per annual increase/decrease in the Wholesale Price Index of

diesel in the previous year for the fuel part and indices of other components will remain

unchanged in the composite index.

7.2. The existing scheme for special freight subsidy will continue for supplies to the North

Eastern States and Jammu & Kashmir. The Government will also have the right to issue

special movement order under the EC Act as per the demand supply situation, particularly for

difficult and remote areas.

8. This Department has separately written to the Chief Executives of urea manufacturing

companies requesting them to convey their participation in the new pricing scheme by

executing an undertaking in the prescribed proforma.

Yours faithfully,

-sd (Sudhir Krishna)

Joint Secretary to the Government of India

Annexure-III

List of urea manufacturing units

S.NO. Name of the Group

Name of the units

I Pre-1992 Gas based units

1. BVFC-Namrup-III 2. IFFCO-Aonla-I 3. Indo-Gulf Jagdishpur 4. KRIBHCO-Hazira 5. NFL-Vijaipur-I 6. RCF-Trombay-V

II Post-1992 Gas based units

1. NFCL-Kakinada-I 2. CFCL-Gadepan-I 3. TCL-Babrala 4. OCFL-Shahjahanpur 5. NFCL-Kakinada-II 6. IFFCO-Aonla-II 7. NFL-Vijaipur-II

III Pre-1992 Naphtha based units

1. FACT-Cochin 2. Duncans, Kanpur 3. IFFCO-Phulpur-I 4. MCFL-Mangalore 5. MFL-Manali (Chennai) 6. SFC-Kota 7. SPIC-Tuticorin 8. ZIL-Goa

IV Post-1992 Naphtha based units

1. IFFCO-Phulpur-II 2. CFCL-Gadepan-II

V FO/LSHS based units

1. FCI-Sindri 2. GNFC-Bharuch 3. NLC-Neyveli 4. NFL-Nangal 5. NFL-Bhatinda 6. NFL-Panipat

VI Mixed energy based units

1. GSFC-Vadodara 2. IFFCO-Kalol 3. RCF-Thal

Annexure-IV

Group – I

Pre-92 Gas Based Plants

Group-I Pre-92 gas based plants

General Information

Name of the unit

Year of

commissioning

Yearly

reassessed

urea capacityFeed/Fuel used Sp energy consumption (Gcal/ MT urea)

(MT)Main

feedstock/fuelOther inputs Design Guaranteed

Actual (avg.

of 5 yrs)

Actual

(2001-02)

HFC, Namrup-III 1987 330000 NG None 7.615 7.967 17.291 22.753

KRIBHCO 1986 1729200 NG Naphtha 6.327 6.327 6.190 6.033

NFL, Vijapur-I 1988 864600 NG Naphtha, NGL NA NA 6.316 6.255

RCF, Trombay-V 1981 330000 AG FO, LSHS 7.950 NA 10.433 10.379

IFFCO, Aonla-I 1988 864600 NG Naphtha, FO NA 5.775 6.028 5.821

IGCFL, Jagdishpur 1988 864600 NGNaphtha, FO

& HSD6.273 6.323 5.859 5.683

Group-I Pre-92 gas based plants

Actual Urea Production

Name of the unit

Yearly

reassessed urea

capacityYear

(MT) 1997-98 1998-99 1999-2000 2000-2001 2001-2002

HFC, Namrup-III 330000Actual

Production (MT)197040 114760 122290 167100 64210

Capacity

Utilisation (%)59.71 34.78 37.06 50.64 19.46

KRIBHCO 1729200Actual

Production (MT)1771511 1516518 1557424 1630526 1694100

Capacity

Utilisation (%)102.45 87.70 90.07 94.29 97.97

NFL, Vijaipur-I 864600Actual

Production (MT)851416 854766 813148 810761 853411

Capacity

Utilisation (%)98.48 98.86 94.05 93.77 98.71

RCF, Trombay-V 330000Actual

Production (MT)317000 270200 302920 290765 39200

Capacity

Utilisation (%)96.06 81.88 91.79 88.11 11.88

IFFCO, Aonla-I 864600Actual

Production (MT)841186 851798 734527 814143 706076

Capacity

Utilisation (%)97.29 98.52 84.96 94.16 81.67

IGCFL, Jagdishpur 864600Actual

Production (MT)933779 1019975 1041967 879429 850145

Capacity

Utilisation (%)108.00 117.97 120.51 101.72 98.33

Group- I Pre-92 gas based plants

Sr. No Name of the unit % of NG used Yearly avg. urea Prodn. Specific energy consumption Gcal/ MT of Urea

MT (1997-98 to 2001-02) Feed Fuel Utilities Total

1 HFC, Namrup-III 99.50 133080 4.653 5.489 7.149 17.291

2 KRIBHCO 84.49 1634016 3.162 1.692 1.336 6.190

3 NFL, Vijapur-I 88.87 836700 3.519 0.916 1.881 6.316

4 RCF, Trombay-V 83.35 244017 3.688 5.737 1.008 10.433

5 IFFCO, Aonla-I 94.66 789546 3.193 1.375 1.459 6.028

6 IGCFL, Jagdishpur 85.11 945059 3.115 1.369 1.376 5.859

Weighted average 87.55 763736 3.294 1.755 1.616 6.665

Percentage of total energy, % 49.42 26.33 24.25 100.000

Specific energy consumption, Gcal/MT urea

17.291

6.190 6.316

10.433

6.028 5.8596.665

0

2

4

6

8

10

12

14

16

18

20

HFC, Namrup-III KRIBHCO NFL, Vijapur-I RCF, Trombay-V IFFCO, Aonla-I IGCFL,

Jagdishpur

Weighted average

Sp

ec

ific

en

erg

y, G

ca

l/M

T

Specific energy consumption, Gcal/MT urea

6.31

6

10.4

33

6.02

8

5.85

96.19

17.2

91

0

2

4

6

8

10

12

14

16

18

20

HFC, Namrup-III KRIBHCO NFL, Vijapur-I RCF, Trombay-V IFFCO, Aonla-I IGCFL, Jagdishpur

Sp

ec

ific

en

erg

y, G

ca

l/M

T

Avg. (6.665)

Avg. excl. outliers (6.110)

Outlier plant : HFC, Namrup-III and RCF, Trombay-V

Group- I Pre-92 gas based plants Specific Energy Consumption, Gcal/ MT of Urea

Sr. No Name of the unit Year wise specific energy consumption Gcal/ MT of Urea % deviation

1997-98 1998-99 1999-00 2000-01 2001-02 Wt. Average from wt. average

1 HFC, Namrup-III 14.825 19.551 17.848 16.140 22.753 17.291 159.430

2 KRIBHCO 6.201 6.362 6.301 6.077 6.033 6.190 -7.127

3 NFL, Vijapur-I 6.449 6.312 6.264 6.298 6.255 6.316 -5.236

4 RCF, Trombay-V 10.700 11.093 10.357 9.614 10.379 10.433 56.534

5 IFFCO, Aonla-I 6.101 6.107 6.096 5.986 5.821 6.028 -9.557

6 IGCFL, Jagdishpur 5.956 5.825 5.887 5.934 5.683 5.859 -12.093

Weighted average 6.817 6.791 6.745 6.663 6.267 6.665 0.000

Wt. avg. excluding Outliers 6.178 6.172 6.153 6.072 5.970 6.110

Group-I 5 years average 3 years average Last year (01-02) average

Specific energy consumption Complete group Excluding Outliers Complete group Excluding Outliers Complete group Excluding Outliers

Gcal/MT urea 6.665 6.110 6.566 6.066 6.267 5.970

Outliers plants in a group :

Plants having deviation beyond (+/-) 20 % on weighted average specific energy consumption have been considered as outliers.

All the plants of the group including outliers have been considered while calculating above weighted average specific energy consumption.

Group- I Pre-92 gas based plants

Specific Energy Consumption, Gcal/ MT of Urea

Group- I Pre-92 gas based plants

Specific Energy Consumption, Gcal/ MT of Urea

Specific energy consumption, Gcal/MT urea

14.8

25

19.5

51

17.8

48

16.1

40

22.7

53

14

15

16

17

18

19

20

21

22

23

1997-98 1998-99 1999-00 2000-01 2001-02

Gcal/M

T u

rea

HFC, Namrup (17.291)

Specific energy consumption, Gcal/MT urea

6.20

1

6.36

2

6.30

1

6.07

7

6.03

3

6

6.175

6.35

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

KRIBHCO (6.190)

Specific energy consumption, Gcal/MT urea

6.44

9

6.31

2

6.26

4 6.29

8

6.25

5

6

6.175

6.35

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

NFL, Vij-I (6.316)

Specific energy consumption, Gcal/MT urea

10.7

0011

.093

10.3

57

9.61

4

10.3

79

9

9.5

10

10.5

11

11.5

12

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

RCF, T-V (10.433)

Specific energy consumption, Gcal/MT urea

6.10

1

6.10

7

6.09

6

5.98

6

5.82

1

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

IFFCO, A-I (6.028)

Specific energy consumption, Gcal/MT urea

5.95

6

5.82

5 5.88

7 5.93

4

5.68

3

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

IGFCL (5.859)

Specific energy consumption, Gcal/MT urea

6.81

7

6.79

1

6.74

5

6.66

3

6.26

7

6

6.5

7

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Wt. Avg. of the group (6.665)

Specific energy consumption, Gcal/MT urea

6.17

8

6.17

2

6.15

3

6.07

2

5.97

0

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Wt. Avg. of the group excl. outliers (6.110)

Group- I Pre-92 gas based plants Summary (% Mix and Energy)

Sr. No Description % Raw Material Mix Sp. energy

NG/AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, % Gcal/ MT urea

5 years average

Case-I Complete group 87.98 8.42 1.60 0.54 0.03 0.01 0.52 0.90 100.00 6.665

Case-II Excluding Outliers 87.41 10.01 1.85 0.00 0.03 0.01 0.62 0.07 100.00 6.110

Last 3 years average

Case-III Complete group 89.43 8.02 1.06 0.58 0.07 0.00 0.00 0.84 100.00 6.566

Case-IV Excluding Outliers 89.31 9.38 1.18 0.00 0.08 0.00 0.00 0.05 100.00 6.066

Last year (01-02) average

Case-V Complete group 91.85 7.73 0.01 0.00 0.05 0.00 0.00 0.37 100.00 6.267

Case-VI Excluding Outliers 91.55 8.32 0.01 0.00 0.06 0.00 0.00 0.07 100.00 5.970

Group- I Pre-92 gas based plants Unitwise % Raw Material Mix

Weighted Average for 5 years

Sr. No Name of the unit NG/AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, %

1 HFC, Namrup-III 99.50 0.00 0.00 0.00 0.00 0.00 0.00 0.50 100.00

2 KRIBHCO 84.49 15.40 0.00 0.00 0.00 0.00 0.00 0.11 100.00

3 NFL, Vijapur-I 88.87 8.10 0.00 0.00 0.00 0.00 3.01 0.02 100.00

4 RCF, Trombay-V 83.35 0.00 0.55 6.44 0.00 0.00 0.00 9.66 100.00

5 IFFCO, Aonla-I 94.66 2.75 2.23 0.00 0.00 0.00 0.00 0.36 100.00

6 IGCFL, Jagdishpur 85.11 8.24 6.68 0.00 0.14 0.04 0.00 -0.21 100.00

Case-I Weighted average 87.98 8.42 1.60 0.54 0.03 0.01 0.52 0.90 100.00

Case-II Wt. avg. excluding Outliers 87.41 10.01 1.85 0.00 0.03 0.01 0.62 0.07 100.00

Weighted average for three years

Sr. No Name of the unit NG/AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, %

1 HFC, Namrup-III 99.43 0.00 0.00 0.00 0.00 0.00 0.00 0.57 100.00

2 KRIBHCO 84.48 15.43 0.00 0.00 0.00 0.00 0.00 0.08 100.00

3 NFL, Vijapur-I 92.47 7.53 0.00 0.00 0.00 0.00 0.00 0.00 100.00

4 RCF, Trombay-V 80.05 0.00 0.70 8.06 0.00 0.00 0.00 10.39 99.20

5 IFFCO, Aonla-I 98.56 0.43 0.72 0.00 0.00 0.00 0.00 0.29 100.00

6 IGCFL, Jagdishpur 87.52 7.39 4.88 0.00 0.37 0.00 0.00 -0.15 100.00

Case-III Weighted average 89.43 8.02 1.06 0.58 0.07 0.00 0.00 0.84 100.00

Case-IV Wt. avg. excluding Outliers 89.31 9.38 1.18 0.00 0.08 0.00 0.00 0.05 100.00

Latest year (2001-02)

Sr. No Name of the unit NG/AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, %

1 HFC, Namrup-III 99.04 0.00 0.00 0.00 0.00 0.00 0.00 0.96 100.00

2 KRIBHCO 83.01 16.91 0.00 0.00 0.00 0.00 0.00 0.08 100.00

3 NFL, Vijapur-I 100.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 100.00

4 RCF, Trombay-V 83.94 0.00 0.00 0.00 0.00 0.00 0.00 16.06 100.00

5 IFFCO, Aonla-I 99.00 0.73 0.05 0.00 0.00 0.00 0.00 0.22 100.00

6 IGCFL, Jagdishpur 93.94 5.78 0.00 0.00 0.29 0.00 0.00 0.00 100.00

Case-V Weighted average 91.85 7.73 0.01 0.00 0.05 0.00 0.00 0.37 100.00

Case-VI Wt. avg. excluding Outliers 91.55 8.32 0.01 0.00 0.06 0.00 0.00 0.07 100.00

Summary of the raw material percentage mix

Sr. No Name of the unit NG/AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, %

5 years average

Case-I Complete group 87.98 8.42 1.60 0.54 0.03 0.01 0.52 0.90 100.00

Case-II Excluding Outliers 87.41 10.01 1.85 0.00 0.03 0.01 0.62 0.07 100.00

Last 3 years average

Case-III Complete group 89.43 8.02 1.06 0.58 0.07 0.00 0.00 0.84 100.00

Case-IV Excluding Outliers 89.31 9.38 1.18 0.00 0.08 0.00 0.00 0.05 100.00

Last year (01-02) average

Case-V Complete group 91.85 7.73 0.01 0.00 0.05 0.00 0.00 0.37 100.00

Case-VI Excluding Outliers 91.55 8.32 0.01 0.00 0.06 0.00 0.00 0.07 100.00

Annexure-V

Group – II

Post-92 Gas Based Plants

Group-II Post-92 gas based plants

General Information

Name of the unit

Year of

commissioning

Yearly

reassessed

urea capacityFeed/Fuel used Sp energy consumption (Gcal/ MT urea)

(MT)Main

feedstock/fuelOther inputs Design Guaranteed

Actual (avg.

of 5 yrs)

Actual

(2001-02)

CFCL-I 1994 864600 NG Naphtha 5.914 NA 5.934 5.768

NFCL-I 1992 597300 NG LSHS NA NA 5.868 5.997

NFL, Vijapur-II 1997 864600 NG, Naphtha NGL NA NA 5.836 5.713

OCFL, Shahjahanpur 1995 864600 NG Naphtha 5.885 5.885 6.008 5.859

Tata, Babrala 1994 864600 NG, Naphtha None NA 5.786 5.546 5.382

IFFCO Aonla-II 1996 864600 NG, Naphtha FO NA 5.591 5.697 5.547

NFCL-II NA 597300 NG, Naphtha None NA NA 6.300 6.034

Group-II Post-92 gas based plants

Actual Urea Production

Name of the unit

Yearly

reassessed urea

capacityYear

(MT) 1997-98 1998-99 1999-2000 2000-2001 2001-2002

CFCL-I 864600Actual

Production (MT)969621 956844 946277 888954 857711

Capacity

Utilisation (%)112.15 110.67 109.45 102.82 99.20

NFCL-I 597300Actual

Production (MT)678617 688870 641378 676484 611329

Capacity

Utilisation (%)113.61 115.33 107.38 113.26 102.35

NFL, Vijapur-II 864600Actual

Production (MT)810268 861856 903154 853405 853412

Capacity

Utilisation (%)93.72 99.68 104.46 98.71 98.71

OCFL, Shahjahanpur 864600Actual

Production (MT)930046 890694 871642 837004 840629

Capacity

Utilisation (%)107.57 103.02 100.81 96.81 97.23

Tata, Babrala 864600Actual

Production (MT)1021001 878457 982268 892647 853547

Capacity

Utilisation (%)118.09 101.60 113.61 103.24 98.72

IFFCO Aonla-II 864600Actual

Production (MT)830897 839426 844126 857982 864356

Capacity

Utilisation (%)96.10 97.09 97.63 99.23 99.97

NFCL-II 597300Actual

Production (MT)523737 656132 688310 610615

Capacity

Utilisation (%)

Commissioning

year109.85 115.24 102.23

Group- II Post-92 gas based plants

Sr. No Name of the unit % of NG used Yearly avg. urea Prodn. Specific energy consumption Gcal/ MT of Urea

MT (1997-98 to 2001-02) Feed Fuel Utilities Total

1 CFCL-I 84.55 923881 3.184 1.287 1.463 5.934

2 NFCL-I 99.92 659336 3.279 1.129 1.459 5.868

3 NFL, Vijapur-II 90.70 856419 3.508 1.535 0.792 5.836

4 OCFL 91.99 874003 3.285 1.256 1.467 6.008

5 Tata 88.27 925584 3.184 1.079 1.283 5.546

6 IFFCO, Aonla-II 88.78 847357 3.194 1.974 0.530 5.697

7 NFCL-II 53.36 619699 3.434 1.243 1.644 6.321

Weighted average 86.23 815183 3.284 1.367 1.205 5.857

Percentage of total energy, % 56.08 23.35 20.57 100.000

Outlier plant : None

Specific energy consumption, Gcal/MT urea

5.934 5.868 5.8366.008

5.546 5.697

6.321

5.857

-0.2

0.8

1.8

2.8

3.8

4.8

5.8

6.8

CFCL-I NFCL-I NFL, Vijapur-II OCFL Tata IFFCO, Aonla-II NFCL-II Weighted average

Sp

ec

ific

en

erg

y,

Gc

al/

MT

Specific energy consumption, Gcal/MT urea

5.93

4

5.86

8

5.83

66.

008

5.54

65.

697

6.32

1

Average of the group

(5.857)

5

5.2

5.4

5.6

5.8

6

6.2

6.4

CFCL-I NFCL-I NFL, Vijapur-II OCFL Tata IFFCO, Aonla-II NFCL-II

Sp

ec

ific

en

erg

y,

Gc

al/

MT

Group- II Post-92 gas based plants Specific Energy Consumption, Gcal/ MT of Urea

Sr. No Name of the unit Year wise specific energy consumption Gcal/ MT of Urea % deviation

1997-98 1998-99 1999-00 2000-01 2001-02 Wt. Average from wt. average

1 CFCL-I 6.032 6.016 6.010 5.821 5.768 5.934 1.315

2 NFCL-I 5.825 5.871 5.910 5.753 5.997 5.868 0.188

3 NFL, Vijapur-II 6.026 5.903 5.784 5.765 5.713 5.836 -0.359

4 OCFL 5.847 6.273 6.064 5.994 5.859 6.008 2.578

5 TATA 5.560 5.693 5.565 5.520 5.382 5.546 -5.310

6 IFFCO, Aonla-II 5.908 5.751 5.665 5.623 5.547 5.697 -2.732

7 NFCL-II 7.184 6.216 6.022 6.034 6.321 7.922

Weighted average 5.860 6.040 5.871 5.777 5.734 5.857 0.000

Wt. avg. excluding Outliers 5.860 6.040 5.871 5.777 5.734 5.857

Group-I 5 years average 3 years average Last year (01-02) average

Specific energy consumption Complete group Excluding Outliers Complete group Excluding Outliers Complete group Excluding Outliers

Gcal/MT urea 5.857 5.857 5.796 5.796 5.734 5.734

Outliers plants in a group :

Plants having deviation beyond (+/-) 20 % on weighted average specific energy consumption have been considered as outliers.

All the plants of the group including outliers have been considered while calculating above weighted average specific energy consumption.

Group- II Post-92 gas based plants

Specific Energy Consumption, Gcal/ MT of Urea

Group- II Post-92 gas based plants

Specific Energy Consumption, Gcal/ MT of Urea

Specific energy consumption, Gcal/MT urea

6.03

2

6.01

6

6.01

0

5.82

1

5.76

8

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

CFCL-I (5.934)

Specific energy consumption, Gcal/MT urea

5.825 5.871 5.9105.753

5.997

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

NFCL-I (5.868)

Specific energy consumption, Gcal/MT urea

6.0265.903

5.784 5.765 5.713

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

NFL, Vij-II (5.836)

Specific energy consumption, Gcal/MT urea

5.847

6.273

6.0645.994

5.859

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

OCFL (6.008)

Specific energy consumption, Gcal/MT urea

5.3825.5205.5655.560 5.693

5

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

TATA (5.546)

Specific energy consumption, Gcal/MT urea

5.9085.751 5.665 5.623 5.547

5

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

IFFCO, Aonla-II (5.697)

Specific energy consumption, Gcal/MT urea

5.8606.040

5.8715.777 5.734

5

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Wt. Avg. of the group (5.812)

Specific energy consumption, Gcal/MT urea

5.8606.040

5.8715.777 5.734

5

5.5

6

6.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Wt. Avg. of the group excluding

outliers (5.812)

Group- II Post-92 gas based plants Summary

Sr. No Name of the unit % Raw Material Mix Sp. energy

NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, % Gcal/ MT urea

5 years average

Case-I Complete group 85.94 0.00 13.87 0.02 0.00 0.00 0.00 0.10 0.08 100.0 5.857

Case-II Excluding Outliers 85.94 0.00 13.87 0.02 0.00 0.00 0.00 0.10 0.08 100.0 5.857

3 years average

Case-III Complete group 89.71 0.00 10.23 -0.02 0.00 0.00 0.00 0.00 0.07 100.0 5.796

Case-IV Excluding Outliers 89.71 0.00 10.23 -0.02 0.00 0.00 0.00 0.00 0.07 100.0 5.796

Last year (01-02) average

Case-V Complete group 93.44 0.00 6.48 0.00 0.00 0.00 0.00 0.00 0.08 100.0 5.734

Case-VI Excluding Outliers 93.44 0.00 6.48 0.00 0.00 0.00 0.00 0.00 0.08 100.0 5.734

Group- II Post-92 gas based plants Raw material percentage (%) mix based on energy consumption

Weighted Average for 5 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, %

1 CFCL-I 84.55 0.00 15.18 0.00 0.00 0.00 0.00 0.00 0.27 100.00

2 NFCL-I 99.92 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.07 100.00

3 NFL, Vijapur-II 90.70 0.00 8.64 0.00 0.00 0.00 0.00 0.64 0.02 100.00

4 OCFL 91.99 0.00 8.01 0.00 0.00 0.00 0.00 0.00 0.00 100.00

5 TATA 88.27 0.00 11.73 0.00 0.00 0.00 0.00 0.00 0.00 100.00

6 IFFCO, Aonla-II 88.78 0.00 11.04 0.12 0.00 0.00 0.00 0.00 0.06 100.00

7 NFCL-II 53.31 0.00 46.59 0.00 0.00 0.00 0.00 0.00 0.10 100.00

Case-I Weighted average 85.92 0.00 13.89 0.02 0.00 0.00 0.00 0.10 0.08 100.00

Case-II Wt. avg. excluding Outliers 85.92 0.00 13.89 0.02 0.00 0.00 0.00 0.10 0.08 100.00

Weighted Average for 3 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, %

1 CFCL-I 87.63 0.00 12.14 0.00 0.00 0.00 0.00 0.00 0.23 100.00

2 NFCL-I 99.88 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.10 100.00

3 NFL, Vijapur-II 95.38 0.00 4.62 0.00 0.00 0.00 0.00 0.00 0.00 100.00

4 OCFL 95.36 0.00 4.64 0.00 0.00 0.00 0.00 0.00 0.00 100.00

5 TATA 93.29 0.00 6.71 0.00 0.00 0.00 0.00 0.00 0.00 100.00

6 IFFCO, Aonla-II 93.25 0.00 6.77 -0.11 0.00 0.00 0.00 0.00 0.08 100.00

7 NFCL-II 59.77 0.00 40.13 0.00 0.00 0.00 0.00 0.00 0.09 100.00

Case-III Weighted average 89.71 0.00 10.23 -0.02 0.00 0.00 0.00 0.00 0.07 100.00

Case-IV Wt. avg. excluding Outliers 89.71 0.00 10.23 -0.02 0.00 0.00 0.00 0.00 0.07 100.00

Latest year (2001-02)

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, %

1 CFCL-I 89.67 0.00 10.13 0.00 0.00 0.00 0.00 0.00 0.20 100.00

2 NFCL-I 99.89 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.11 100.00

3 NFL, Vijapur-II 100.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 100.00

4 OCFL 97.30 0.00 2.70 0.00 0.00 0.00 0.00 0.00 0.00 100.00

5 TATA 99.24 0.00 0.76 0.00 0.00 0.00 0.00 0.00 0.00 100.00

6 IFFCO, Aonla-II 88.55 0.00 11.30 -0.01 0.00 0.00 0.00 0.00 0.16 100.00

7 NFCL-II 77.40 0.00 22.49 0.00 0.00 0.00 0.00 0.00 0.11 100.00

Case-V Weighted average 93.44 0.00 6.48 0.00 0.00 0.00 0.00 0.00 0.08 100.00

Case-VI Wt. avg. excluding Outliers 93.44 0.00 6.48 0.00 0.00 0.00 0.00 0.00 0.08 100.00

Summary of the raw material percentage mix

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Power, % Total, %

5 years average

Case-I Complete group 85.92 0.00 13.89 0.02 0.00 0.00 0.00 0.10 0.08 100.00

Case-II Excluding Outliers 85.92 0.00 13.89 0.02 0.00 0.00 0.00 0.10 0.08 100.00

3 years average

Case-III Complete group 89.71 0.00 10.23 -0.02 0.00 0.00 0.00 0.00 0.07 100.0

Case-IV Excluding Outliers 89.71 0.00 10.23 -0.02 0.00 0.00 0.00 0.00 0.07 100.0

Last year (01-02) average

Case-V Complete group 93.44 0.00 6.48 0.00 0.00 0.00 0.00 0.00 0.08 100.0

Case-VI Excluding Outliers 93.44 0.00 6.48 0.00 0.00 0.00 0.00 0.00 0.08 100.0

Annexure-VI

Group – III-A

Pre-92 Naphtha Based Plants

Group-III A Pre-92 Naphtha based plants

General Information

Name of the unit

Year of

commissioning

Yearly

reassessed

urea capacityFeed/Fuel used Sp energy consumption (Gcal/ MT urea)

(MT)Main

feedstock/fuel

Other

inputsDesign Guaranteed

Actual (avg.

of 5 yrs)

Actual

(2001-02)

SFC Kota 1969 379000 NaphthaFO, Coal,

HSDNA NA 8.217 8.090

Duncans 1970/1981 722000 Naphtha Coal NA NA 7.944 7.909

MFL 1997 486750 NaphthaFO, LSHS,

HSD7.320 7.250 8.967 8.979

FACT 1973 330000 Naphtha FO, LSHS 8.381 NA 11.320 15.590

ZACL 1973 399300 Naphtha FO 8.350 NA 7.542 7.332

SPIC 1975 620400 NaphthaFO, LSHS,

HSD7.600 7.600 7.481 7.293

MCFL 1976 340000 Naphtha FO 7.350 7.880 7.480 7.323

IFFCO Phulpur-I 1980 551100 NaphthaFO, LSHS,

HSD, COAL NA 7.400 8.140 7.689

Group-III A Pre-92 Naphtha based plants

Actual Urea Production

Name of the unit

Yearly

reassessed urea

capacityYear

(MT) 1997-98 1998-99 1999-2000 2000-2001 2001-2002

SFC Kota 379000Actual

Production (MT)392653 393087 404535 324735 330200

Capacity

Utilisation (%)103.60 103.72 106.74 85.68 87.12

Duncans 722000Actual

Production (MT)733720 732936 694891 673319 658700

Capacity

Utilisation (%)101.62 101.51 96.25 93.26 91.23

MFL 486750Actual

Production (MT)63711 327982 403760 401570 286891

Capacity

Utilisation (%)

Commissionin

g year67.38 82.95 82.50 58.94

FACT 330000Actual

Production (MT)274200 183065 265298 275170 22280

Capacity

Utilisation (%)83.09 55.47 80.39 83.38 6.75

ZACL 399300Actual

Production (MT)477800 336615 430071 394145 419417

Capacity

Utilisation (%)119.66 84.30 107.71 98.71 105.04

SPIC 620400Actual

Production (MT)618280 591151 681769 627711 600110

Capacity

Utilisation (%)99.66 95.29 109.89 101.18 96.73

MCFL 340000Actual

Production (MT)274509 356797 288102 340050 340002

Capacity

Utilisation (%)80.74 104.94 84.74 100.01 100.00

IFFCO Phulpur-I 551100Actual

Production (MT)565029 570275 507949 520001 512000

Capacity

Utilisation (%)102.53 103.48 92.17 94.36 92.91

Group- III-A Pre-92 Naphtha based plants

Sr. No Name of the unit % of Naphtha used Yearly avg. urea Prodn. Specific energy consumption Gcal/ MT of Urea

MT (1997-98 to 2001-02) Feed Fuel Utilities Total

1 SFC, Kota 58.01 369042 4.767 0.000 3.450 8.217

2 Duncans 60.25 698713 3.236 1.551 3.158 7.944

3 MFL 57.71 296783 4.006 1.168 3.792 8.967

4 FACT 48.39 204003 5.096 5.548 0.676 11.320

5 ZACL 69.44 411610 3.173 2.065 2.305 7.542

6 SPIC 60.32 623804 3.270 3.592 0.619 7.481

7 MCFL 67.39 319892 3.224 1.817 2.439 7.480

8 IFFCO, Ph-I 63.01 535051 3.389 1.792 2.959 8.140

Weighted average 61.29 432362 3.596 2.080 2.441 8.116

Percentage of total energy, % 44.31 25.62 30.07 100.00

Outlier plant : FACT, Cochin

Specific energy consumption, Gcal/MT urea

8.2177.944

8.967

11.320

7.542 7.481 7.480

8.140 8.116

0

2

4

6

8

10

12

SFC, Kota Duncans MFL FACT ZACL SPIC MCFL IFFCO, Ph-I Weighted

average

Sp

ec

ific

en

erg

y,

Gc

al/

MT

Specific energy consumption, Gcal/MT urea

8.21

7

7.94

4

8.96

7

11.3

20

7.54

2

7.48

1

7.48

08.

140

Avg. (8.116)

Avg. excl. outliers

(7.915)

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

SFC, Kota Duncans MFL FACT ZACL SPIC MCFL IFFCO, Ph-I

Sp

ec

ific

en

erg

y,

Gc

al/

MT

Group- III-A Pre-92 Naphtha based plants Specific Energy Consumption, Gcal/ MT of Urea

Sr. No Name of the unit Year wise specific energy consumption Gcal/ MT of Urea % deviation

1997-98 1998-99 1999-00 2000-01 2001-02 Wt. Average from wt. average

1 SFC, Kota 8.429 8.188 8.154 8.205 8.090 8.217 1.244

2 Duncans 8.039 8.125 7.794 7.833 7.909 7.944 -2.119

3 MFL 13.748 9.541 8.357 8.343 8.979 8.967 10.485

4 FACT 10.595 12.459 11.507 10.757 15.590 11.320 39.478

5 ZACL 7.627 7.899 7.573 7.325 7.332 7.542 -7.072

6 SPIC 7.739 7.625 7.477 7.275 7.293 7.481 -7.824

7 MCFL 7.674 7.540 7.565 7.347 7.323 7.480 -7.836

8 IFFCO, Ph-I 8.699 8.126 8.014 8.115 7.689 8.140 0.296

Weighted average 8.365 8.326 8.091 7.991 7.787 8.116 0.000

Wt. avg. excluding Outliers 8.169 8.098 7.826 7.759 7.732 7.915

Group-I 5 years average 3 years average Last year (01-02) average

Specific energy consumption Complete group Excluding Outliers Complete group Excluding Outliers Complete group Excluding Outliers

Gcal/MT urea 8.116 7.915 7.964 7.773 7.787 7.732

Outliers plants in a group :

Plants having deviation beyond (+/-) 20 % on weighted average specific energy consumption have been considered as outliers.

All the plants of the group including outliers have been considered while calculating above weighted average specific energy consumption.

Group- III-A Pre-92 Naphtha based plants

Specific Energy Consumption, Gcal/ MT of Urea

Group- III-A Pre-92 Naphtha based plants

Specific Energy Consumption, Gcal/ MT of Urea

Group- III-A Pre-92 Naphtha based plants

Specific Energy Consumption, Gcal/ MT of Urea

Specific energy consumption, Gcal/MT urea

8.42

9

8.18

8

8.15

48.

205

8.09

0

7.5

8

8.5

9

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

SFC, Kota (8.217)

Specific energy consumption, Gcal/MT urea

8.03

9 8.12

5

7.79

47.

833 7.

909

7.5

7.675

7.85

8.025

8.2

8.375

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Duncans (7.944)

Specific energy consumption, Gcal/MT urea

13.748

9.541

8.357 8.343

8.979

8

9

10

11

12

13

14

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

MFL (8.967)

Specific energy consumption, Gcal/MT urea

7.627

7.899

7.332

7.573

7.325

7

7.5

8

8.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

ZACL (7.542)

Specific energy consumption, Gcal/MT urea

7.739

7.625

7.477

7.2937.275

7

7.5

8

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

SPIC (7.481)

Specific energy consumption, Gcal/MT urea

8.1698.098

7.8267.759 7.732

7

7.5

8

8.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Wt. Avg. of the group excl. outliers (7.915)

Specific energy consumption, Gcal/MT urea

10.5

95

12.4

59

11.5

07

10.7

57

15.5

90

8

9

10

11

12

13

14

15

16

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

FACT (11.320)

Specific energy consumption, Gcal/MT urea

7.674

7.540 7.565

7.347 7.323

7.00

7.50

8.00

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

MCFL (7.480)

Specific energy consumption, Gcal/MT urea

8.699

8.1268.014

8.115

7.689

7.5

8

8.5

9

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

IFFCO, Ph-I (8.140)

Specific energy consumption, Gcal/MT urea

8.365 8.326

8.0917.991

7.787

7

7.5

8

8.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Avg. of group (8.116)

Group- III-A Pre-92 Naphtha based plants Summary

Sr. No Name of the unit % Raw Material Mix Sp. energy

NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Coal, % Power, % Total, % Gcal/ MT urea

5 years average

Case-I Complete group 0.00 0.00 60.86 15.85 3.25 1.26 0.17 0.00 11.85 6.76 100.00 8.116

Case-II Excluding Outliers 0.00 0.00 61.97 16.53 1.03 0.54 0.18 0.00 12.91 6.83 100.00 7.915

3 years average

Case-III Complete group 0.00 0.00 61.23 16.11 3.00 1.35 0.24 0.00 11.45 6.62 100.00 7.964

Case-IV Excluding Outliers 0.00 0.00 62.52 16.70 1.07 0.40 0.26 0.00 12.40 6.66 100.00 7.773

Last year (01-02) average

Case-III Complete group 0.00 0.00 62.09 16.98 1.38 0.49 0.10 0.00 12.43 6.53 100.00 7.787

Case-IV Excluding Outliers 0.00 0.00 62.36 16.92 1.20 0.31 0.10 0.00 12.61 6.50 100.00 7.732

Group- III-A Pre-92 Naphtha based plants Unitwise % Raw material mix

Weighted Average for 5 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

1 SFC, Kota 0.00 0.00 58.01 0.61 0.00 0.00 0.01 37.17 0.00 4.20 100.00

2 Duncans 0.00 0.00 60.25 0.00 0.00 0.00 0.00 16.62 0.00 23.13 100.00

3 MFL 0.00 0.00 57.71 32.94 0.01 0.00 1.52 0.00 0.00 7.82 100.00

4 FACT 0.00 0.00 48.39 8.24 28.06 9.34 0.00 0.00 0.00 5.97 100.00

5 ZACL 0.00 0.00 69.44 30.24 0.00 0.00 0.00 0.00 0.00 0.32 100.00

6 SPIC 0.00 0.00 60.32 34.89 0.11 2.38 0.01 0.00 0.00 2.29 100.00

7 MCFL 0.00 0.00 67.39 32.48 0.00 0.00 0.00 0.00 0.00 0.13 100.00

8 IFFCO, Ph-I 0.00 0.00 63.01 0.45 5.96 0.64 0.14 29.32 0.00 0.48 100.00

Case-I Weighted average 0.00 0.00 60.86 15.85 3.25 1.26 0.17 11.85 0.00 6.76 100.00

Case-II Wt. avg. excluding Outliers 0.00 0.00 61.97 16.53 1.03 0.54 0.18 12.91 0.00 6.83 100.00

Weighted Average for 3 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

1 SFC, Kota 0.00 0.00 57.99 0.55 0.00 0.00 0.01 37.31 0.00 4.14 100.00

2 Duncans 0.00 0.00 60.46 0.00 0.00 0.00 0.00 16.95 0.00 22.60 100.00

3 MFL 0.00 0.00 58.61 31.87 0.01 0.00 1.99 0.00 0.00 7.53 100.00

4 FACT 0.00 0.00 45.78 9.06 26.18 12.74 0.00 0.00 0.00 6.23 100.00

5 ZACL 0.00 0.00 70.04 29.71 0.00 0.00 0.00 0.00 0.00 0.26 100.00

6 SPIC 0.00 0.00 61.74 33.52 0.09 1.97 0.01 0.00 0.00 2.67 100.00

7 MCFL 0.00 0.00 67.79 32.21 0.00 0.00 0.00 0.00 0.00 0.00 100.00

8 IFFCO, Ph-I 0.00 0.00 63.48 0.04 6.58 0.25 0.12 29.20 0.00 0.34 100.00

Case-III Weighted average 0.00 0.00 61.23 16.11 3.00 1.35 0.24 11.45 0.00 6.62 100.00

Case-IV Wt. avg. excluding Outliers 0.00 0.00 62.52 16.70 1.07 0.40 0.26 12.40 0.00 6.66 100.00

Latest year (2001-02)

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

1 SFC, Kota 0.00 0.00 57.57 0.55 0.00 0.00 0.01 38.41 0.00 3.46 100.00

2 Duncans 0.00 0.00 60.05 0.00 0.00 0.00 0.00 17.23 0.00 22.72 100.00

3 MFL 0.00 0.00 56.60 34.45 0.00 0.00 0.84 0.00 0.00 8.11 100.00

4 FACT 0.00 0.00 43.22 20.93 14.28 13.17 0.00 0.00 0.00 8.40 100.00

5 ZACL 0.00 0.00 69.82 29.87 0.00 0.00 0.00 0.00 0.00 0.31 100.00

6 SPIC 0.00 0.00 62.31 34.11 0.00 1.70 0.02 0.00 0.00 1.86 100.00

7 MCFL 0.00 0.00 67.72 32.28 0.00 0.00 0.00 0.00 0.00 0.00 100.00

8 IFFCO, Ph-I 0.00 0.00 63.28 0.00 7.40 0.00 0.06 29.09 0.00 0.17 100.00

Case-V Weighted average 0.00 0.00 62.09 16.98 1.38 0.49 0.10 12.43 0.00 6.53 100.00

Case-VI Wt. avg. excluding Outliers 0.00 0.00 62.36 16.92 1.20 0.31 0.10 12.61 0.00 6.50 100.00

Summary of the raw material percentage mix

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

5 years average

Case-I Complete group 0.00 0.00 60.86 15.85 3.25 1.26 0.17 11.85 0.00 6.76 100.00

Case-II Excluding Outliers 0.00 0.00 61.97 16.53 1.03 0.54 0.18 12.91 0.00 6.83 100.00

3 years average

Case-III Complete group 0.00 0.00 61.23 16.11 3.00 1.35 0.24 0.00 11.45 6.62 100.00

Case-IV Excluding Outliers 0.00 0.00 62.52 16.70 1.07 0.40 0.26 0.00 12.40 6.66 100.00

Last year (01-02) average

Case-III Complete group 0.00 0.00 62.09 16.98 1.38 0.49 0.10 0.00 12.43 6.53 100.00

Case-IV Excluding Outliers 0.00 0.00 62.36 16.92 1.20 0.31 0.10 0.00 12.61 6.50 100.00

Annexure-VII

Group – III-B

Post-92 Naphtha Based Plants

Group-III B Post-92 Naphtha based plants

General Information

Name of the unit

Year of

commissioning

Yearly

reassessed

urea capacityFeed/Fuel used Sp energy consumption (Gcal/ MT urea)

(MT)Main

feedstock/fuel

Other

inputsDesign Guaranteed

Actual (avg.

of 5 yrs)

Actual

(2001-02)

IFFCO, Phulpur-II 1997 864600 NaphthaFO, LSHS,

HSD, CoalNA 5.910 6.520 6.111

CFCL-II 1999 864600 Naphtha NG 5.717 5.512 5.811 5.693

Group-III B Post-92 Naphtha based plants

Actual Urea Production

Name of the unit

Yearly

reassessed urea

capacityYear

(MT) 1997-98 1998-99 1999-2000 2000-2001 2001-2002

IFFCO, Phulpur-II 864600Actual

Production (MT)227049 836004 805551 853609 857742

Capacity

Utilisation (%)

Commissioning

year96.69 93.17 98.73 99.21

CFCL-II 864600Actual

Production (MT)- - 321041 854081 856972

Capacity

Utilisation (%)- -

Commissioning

year98.78 99.12

Group- III-B Post - 92 Naphtha based plants

Sr. No Name of the unit % of Naphtha used Yearly avg. urea Prodn. Specific energy consumption Gcal/ MT of Urea

MT (1997-98 to 2001-02) Feed Fuel Utilities Total

9 CFCL-II 98.00 677365 3.24 1.47 1.10 5.810

10 IFFCO, Ph-II 81.40 715991 3.257 2.053 1.211 6.520

Weighted average 89.47 696678 3.251 1.842 1.171 6.263

Percentage of total energy, % 51.91 29.41 18.69 100.00

Outlier plant : None

Specific energy consumption, Gcal/MT urea

5.810

6.5206.263

0

1

2

3

4

5

6

7

CFCL-II IFFCO, Ph-II Weighted average

Sp

ec

ific

en

erg

y,

Gc

al/

MT

Specific energy consumption, Gcal/MT urea

5.81

0

6.52

0

Avg. (6.263)

5.0

6.0

7.0

CFCL-II IFFCO, Ph-II

Sp

ec

ific

en

erg

y,

Gc

al/

MT

Group- III-B Post 92 Naphtha based plants Specific Energy Consumption, Gcal/ MT of Urea

Sr. No Name of the unit Year wise specific energy consumption Gcal/ MT of Urea % deviation

1997-98 1998-99 1999-00 2000-01 2001-02 Wt. Average from wt. average

1 IFFCO, Ph-II 6.959 6.388 6.386 7.072 6.111 6.520 4.103

2 CFCL-II 6.088 5.824 5.693 5.811 -7.217

Weighted average 6.959 6.388 6.301 6.448 5.902 6.263 0.000

Wt. avg. excluding Outliers 6.959 6.388 6.301 6.448 5.902 6.263

Group-I 5 years average 3 years average Last year (01-02) average

Specific energy consumption Complete group Excluding Outliers Complete group Excluding Outliers Complete group Excluding Outliers

Gcal/MT urea 6.263 6.263 6.206 6.206 5.902 5.902

Outliers plants in a group :

Plants having deviation beyond (+/-) 20 % on weighted average specific energy consumption have been considered as outliers.

All the plants of the group including outliers have been considered while calculating above weighted average specific energy consumption.

Group- III-B Post- 92 Naphtha based plants

Specific Energy Consumption, Gcal/ MT of Urea

Specific energy consumption, Gcal/MT urea

6.959

6.388 6.386

7.072

6.1116

6.5

7

7.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gcal/M

T u

rea

IFFCO, Ph-II (6.520)

Specific energy consumption, Gcal/MT urea

6.088

5.693

5.824

5.5

6

6.5

1999-00 2000-01 2001-02

Gcal/M

T u

rea

CFCL-II (5.811)

Specific energy consumption, Gcal/MT urea

6.959

6.448

5.902

6.388 6.301

5.5

6

6.5

7

7.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gcal/M

T u

rea

Avg. of group (6.264)

Group- III-B Post-92 Naphtha based plants Summary

Sr. No Name of the unit % Raw Material Mix Sp. energy

NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Coal, % Power, % Total, % Gcal/ MT urea

5 years average

Case-I Complete group 0.82 0.00 88.99 0.21 6.36 0.02 0.02 0.00 3.13 0.47 100.00 6.263

Case-II Excluding Outliers 0.82 0.00 88.99 0.21 6.36 0.02 0.02 0.00 3.13 0.47 100.00 6.263

3 years average

Case-III Complete group 0.74 0.00 88.05 0.00 6.40 0.03 0.02 0.00 4.39 0.36 100.00 6.206

Case-IV Excluding Outliers 0.74 0.00 88.05 0.00 6.40 0.03 0.02 0.00 4.39 0.36 100.00 6.206

Last year (01-02) average

Case-V Complete group 0.71 0.00 90.53 0.00 4.43 0.00 0.01 0.00 4.08 0.24 100.00 5.902

Case-VI Excluding Outliers 0.71 0.00 90.53 0.00 4.43 0.00 0.01 0.00 4.08 0.24 100.00 5.902

Group- III-B Post -92 Naphtha based plants Unitwise % Raw Material Mix

Weighted Average for 5 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

1 IFFCO, Ph-II 0.00 0.00 81.40 0.38 11.72 0.03 0.03 5.76 0.00 0.68 100.00

2 CFCL-II 1.79 0.00 98.00 0.00 0.00 0.00 0.00 0.00 0.00 0.21 100.00

Case-I Weighted average 0.82 0.00 88.99 0.21 6.36 0.02 0.02 3.13 0.00 0.47 100.00

Case-II Wt. avg. excluding Outliers 0.82 0.00 88.99 0.21 6.36 0.02 0.02 3.13 0.00 0.47 100.00

Weighted Average for 3 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

1 IFFCO, Ph-II 0.00 0.00 80.90 0.00 11.00 0.05 0.03 7.55 0.00 0.47 100.00

2 CFCL-II 1.78 0.00 98.00 0.00 0.00 0.00 0.00 0.00 0.00 0.21 100.00

Case-III Weighted average 0.74 0.00 88.05 0.00 6.40 0.03 0.02 4.39 0.00 0.36 100.00

Case-IV Wt. avg. excluding Outliers 0.74 0.00 88.05 0.00 6.40 0.03 0.02 4.39 0.00 0.36 100.00

Latest year (2001-02)

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

1 IFFCO, Ph-II 0.00 0.00 83.27 0.00 8.55 0.00 0.02 7.88 0.00 0.28 100.00

2 CFCL-II 1.48 0.00 98.32 0.00 0.00 0.00 0.00 0.00 0.00 0.20 100.00

Case-V Weighted average 0.71 0.00 90.53 0.00 4.43 0.00 0.01 4.08 0.00 0.24 100.00

Case-VI Wt. avg. excluding Outliers 0.71 0.00 90.53 0.00 4.43 0.00 0.01 4.08 0.00 0.24 100.00

Summary of the raw material percentage mix

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

5 years average

Case-I Complete group 0.82 0.00 88.99 0.21 6.36 0.02 0.02 3.13 0.00 0.47 100.00

Case-II Excluding Outliers 0.82 0.00 88.99 0.21 6.36 0.02 0.02 3.13 0.00 0.47 100.00

3 years average

Case-III Complete group 0.74 0.00 88.05 0.00 6.40 0.03 0.02 0.00 4.39 0.36 100.00

Case-IV Excluding Outliers 0.74 0.00 88.05 0.00 6.40 0.03 0.02 0.00 4.39 0.36 100.00

Last year (01-02) average

Case-V Complete group 0.71 0.00 90.53 0.00 4.43 0.00 0.01 0.00 4.08 0.24 100.00

Case-VI Excluding Outliers 0.71 0.00 90.53 0.00 4.43 0.00 0.01 0.00 4.08 0.24 100.00

Annexure-VIII

Group – IV

FO/LSHS Based Plants

Group-IV FO/LSHS based plants

General Information

Name of the unit

Year of

commissioning

Yearly

reassessed

urea capacityFeed/Fuel used Sp energy consumption (Gcal/ MT urea)

(MT)Main

feedstock/fuel

Other

inputsDesign Guaranteed

Actual (avg.

of 5 yrs)

Actual

(2001-02)

FCI, Sindri 1979 330000 LSHS, FO Coal 8.500 NA 17.459 NA

GNFC, Bharuch 1982 643500 LSHS, FONG, HSD,

Coal7.622 7.622 8.170 8.032

NFL, Bhatinda 1979 511500 FO Coal, HSD NA NA 9.712 10.362

NFL, Nangal 1978 366300Naphtha, FO,

LSHSCoal, LDO NA NA 9.987 9.894

NFL, Panipat 1979 511500 FO, LSHS Coal, LDO NA NA 9.967 9.678

NLC, Nevveli 1966/1979 152000 FO, LSHS None 13.000 NA 16.259 14.863

Group-IV FO/LSHS based plants

Actual Urea Production

Name of the unit

Yearly

reassessed urea

capacityYear

(MT) 1997-98 1998-99 1999-2000 2000-2001 2001-2002

FCI, Sindri 330000Actual

Production (MT)208588 223151 306005 237517 NA

Capacity

Utilisation (%)63.21 67.62 92.73 71.97

GNFC, Bharuch 643500Actual

Production (MT)631279 660894 615781 639325 644080

Capacity

Utilisation (%)98.10 102.70 95.69 99.35 100.09

NFL, Bhatinda 511500Actual

Production (MT)567367 503710 543345 478600 514130

Capacity

Utilisation (%)110.92 98.48 106.23 93.57 100.51

NFL, Nangal 366300Actual

Production (MT)406332 388505 344284 300257 458175

Capacity

Utilisation (%)110.93 106.06 93.99 81.97 125.08

NFL, Panipat 511500Actual

Production (MT)562250 535747 532845 492776 511538

Capacity

Utilisation (%)109.92 104.74 104.17 96.34 100.01

NLC, Nevveli 152000Actual

Production (MT)102577 67834 17225 97851 61965

Capacity

Utilisation (%)67.48 44.63 11.33 64.38 40.77

Group- IV FO/LSHS based plants

Sr. No Name of the unit % of FO/LSHS used Yearly avg. urea Prodn. Specific energy consumption Gcal/ MT of Urea

MT (1997-98 to 2001-02) Feed Fuel Utilities Total

1 FCI, Sindri 37.26 243815 5.688 0.457 11.315 17.459

2 GNFC, Bharuch 60.80 638272 4.226 0.000 3.944 8.170

3 NFL, Bhatinda 56.72 521430 4.874 0.000 5.689 10.564

4 NFL, Nangal 54.49 379511 4.968 0.000 5.020 9.987

5 NFL, Panipat 56.39 526959 4.808 0.000 5.159 9.967

6 NLC, Nevveli 39.82 69490 6.475 0.000 9.785 16.259

Weighted average 54.90 396580 4.813 0.038 5.575 10.426

Percentage of total energy, % 46.16 0.37 53.47 100.000

Outlier plants : FCI, Sindri, GNFC Bharuch and NLC, Nevveli

Specific energy consumption, Gcal/MT urea

17.459

8.170

10.5649.987 9.967

16.259

10.426

0

2

4

6

8

10

12

14

16

18

20

FCI, Sindri GNFC, Bharuch NFL, Bhatinda NFL, Nangal NFL, Panipat NLC, Nevveli Weighted

average

Sp

ec

ific

en

erg

y,

Gc

al/

MT

Specific energy consumption, Gcal/MT urea

17.4

59

8.17

0

10.5

64

9.98

7

9.96

7

16.2

59

Avg. (10.426)

Avg. excl. outlier (10.190)

6

8

10

12

14

16

18

20

FCI, Sindri GNFC, Bharuch NFL, Bhatinda NFL, Nangal NFL, Panipat NLC, Nevveli

Sp

ec

ific

en

erg

y,

Gc

al/

MT

Group- IV FO/LSHS based plants Specific Energy Consumption, Gcal/ MT of Urea

Sr. No Name of the unit Year wise specific energy consumption Gcal/ MT of Urea % deviation

1997-98 1998-99 1999-00 2000-01 2001-02 Wt. Average from wt. average

1 FCI, Sindri 16.568 20.747 14.466 19.010 17.459 67.456

2 GNFC, Bharuch 8.308 8.476 8.136 7.888 8.032 8.170 -21.638

3 NFL, Bhatinda 10.210 10.748 10.629 10.932 10.362 10.564 1.324

4 NFL, Nangal 9.937 10.053 10.115 9.965 9.894 9.987 -4.211

5 NFL, Panipat 9.807 10.129 10.255 9.960 9.678 9.967 -4.402

6 NLC, Nevveli 15.706 17.105 27.010 15.244 14.863 16.259 55.947

Weighted average 10.352 10.983 10.436 10.765 9.546 10.426 0.000

Wt. avg. excluding Outliers 9.990 10.327 10.364 10.327 9.982 10.190

Group-I 5 years average 3 years average Last year (01-02) average

Specific energy consumption Complete group Excluding Outliers Complete group Excluding Outliers Complete group Excluding Outliers

Gcal/MT urea 10.426 10.190 10.163 10.067 9.546 9.982 Outliers plants in a group :

Plants having deviation beyond (+/-)20 % on weighted average specific energy consumption have been considered as outliers.

All the plants of the group including outliers have been considered while calculating above weighted average specific energy consumption.

For NFL Bhtinda, lowest specific energy consumption of 10.210 Gcal/MT urea and urea production of 567367 MT achieved in the year 1997-87 have been considered for each of the three years for calculation of three years group average for group-IV.

Group- IV FO/ LSHS based plants

Specific Energy Consumption, Gcal/ MT of Urea

Group- IV FO/ LSHS based plants

Specific Energy Consumption, Gcal/ MT of Urea

Specific energy consumption, Gcal/MT urea

16.5

68

20.7

47

14.4

66

19.0

10

14

15

16

17

18

19

20

21

22

1997-98 1998-99 1999-00 2000-01

Gca

l/M

T u

rea

FCI, Sindri (17.459)

Specific energy consumption, Gcal/MT urea

8.308

8.476

8.136

7.888

8.032

7.5

8

8.5

9

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

GNFC, Bharuch (8.170)

Specific energy consumption, Gcal/MT urea

10.210

10.748 10.62910.932

10.362

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

NFL, Bhantinda (9.712)

Specific energy consumption, Gcal/MT urea

9.80710.129 10.255

9.9609.678

8.5

9

9.5

10

10.5

11

11.5

12

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

NFL, Panipat (9.967)

Specific energy consumption, Gcal/MT urea

15.70617.105

27.010

15.244 14.863

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

26.0

28.0

30.0

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

NLC, Nevveli (16.259)

Specific energy consumption, Gcal/MT urea

9.93

710

.053

10.1

15

9.96

5

9.89

4

8

9

10

11

12

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

NFL, Nangal (9.987)

Specific energy consumption, Gcal/MT urea

10.352

10.983

10.43610.765

9.546

7.5

8.5

9.5

10.5

11.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Avg. of group (10.236)

Specific energy consumption, Gcal/MT urea

9.990

10.327 10.364 10.327

9.982

9

10

11

12

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Avg. excl. outliers (9.351)

Group- IV FO/LSHS based plants Summary

Sr. No Description % Raw Material Mix Sp. energy

NG, % AG, % Naphtha, % FO, % LSHS, % Ex. steam, % HSD, % Coal, % NGL, % Power, % Total, % Gcal/ MT urea

5 years average

Case-I Complete group 1.45 0.00 0.25 22.53 30.58 1.07 0.03 38.83 0.00 5.26 100.00 10.426

Case-II Excluding Outliers 0.00 0.00 0.44 29.75 26.27 0.00 0.05 39.67 0.00 3.82 100.00 10.190

3 years average

Case-III Complete group 0.68 0.00 0.43 22.83 29.67 0.89 0.03 41.02 0.00 4.44 100.00 10.163

Case-IV Excluding Outliers 0.00 0.00 0.75 31.94 23.43 0.00 0.05 39.78 0.00 4.03 100.00 10.067

Last year (01-02) average

Case-V Complete group 0.67 0.00 1.54 30.74 23.33 1.01 0.02 37.50 0.00 5.20 100.00 9.546

Case-VI Excluding Outliers 0.70 0.00 1.61 30.30 24.41 0.00 0.03 39.22 0.00 3.74 100.00 9.982

Group- IV FO/ LSHS based plants Unitwise % Raw Material Mix

Weighted Average for 5 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Steam, % HSD, % Coal, % NGL, % Power, % Total, %

1 FCI, Sindri 0.00 0.00 0.00 20.08 17.18 0.00 0.00 54.40 0.00 8.34 100.00

2 GNFC, Bharuch 6.99 0.00 0.00 3.96 56.84 0.00 0.00 32.21 0.00 0.00 100.00

3 NFL, Bhatinda 0.00 0.00 0.00 56.72 0.00 0.00 0.07 41.22 0.00 1.99 100.00

4 NFL, Nangal 0.00 0.00 1.69 7.35 47.14 0.00 0.02 33.16 0.00 10.64 100.00

5 NFL, Panipat 0.00 0.00 0.00 17.64 38.75 0.00 0.06 42.73 0.00 0.82 100.00

6 NLC, Nevveli 0.00 0.00 0.00 24.44 15.38 23.77 0.00 0.00 0.00 36.41 100.00

Case-I Weighted average 1.45 0.00 0.25 22.53 30.58 1.07 0.03 38.83 0.00 5.26 100.00

Case-II Wt. avg. excluding Outliers 0.00 0.00 0.44 29.75 26.27 0.00 0.05 39.67 0.00 3.82 100.00

Weighted Average for 3 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Steam, % HSD, % Coal, % NGL, % Power, % Total, %

1 FCI, Sindri 0.00 0.00 0.00 16.14 20.84 0.00 0.00 59.33 0.00 3.69 100.00

2 GNFC, Bharuch 3.31 0.00 0.00 0.20 60.37 0.00 0.00 36.12 0.00 0.00 100.00

3 NFL, Bhatinda 0.00 0.00 0.00 56.40 0.00 0.00 0.07 41.47 0.00 2.06 100.00

4 NFL, Nangal 0.00 0.00 2.92 6.24 46.83 0.00 0.03 32.71 0.00 11.27 100.00

5 NFL, Panipat 0.00 0.00 0.00 24.33 31.61 0.00 0.05 43.07 0.00 0.93 100.00

6 NLC, Nevveli 0.00 0.00 0.00 38.59 0.94 23.06 0.00 0.00 0.00 37.41 100.00

Case-III Weighted average 0.68 0.00 0.43 22.83 29.67 0.89 0.03 41.02 0.00 4.44 100.00

Case-IV Wt. avg. excluding Outliers 0.00 0.00 0.75 31.94 23.43 0.00 0.05 39.78 0.00 4.03 100.00

Latest year (2001-02)

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Steam, % HSD, % Coal, % NGL, % Power, % Total, %

1 FCI, Sindri - - - - - - - - - - 0.00

2 GNFC, Bharuch 2.71 0.00 0.00 0.15 57.12 0.00 0.00 40.02 0.00 0.00 100.00

3 NFL, Bhatinda 0.00 0.00 0.00 56.19 0.00 0.00 0.06 41.98 0.00 1.77 100.00

4 NFL, Nangal 0.00 0.00 7.08 6.53 42.42 0.00 0.04 30.83 0.00 13.10 100.00

5 NFL, Panipat 0.00 0.00 0.00 55.71 0.00 0.00 0.00 43.11 0.00 1.18 100.00

6 NLC, Nevveli 0.00 0.00 0.00 40.18 0.00 22.95 0.00 0.00 0.00 36.87 100.00

Case-V Weighted average 0.67 0.00 1.54 30.74 23.33 1.01 0.02 37.50 0.00 5.20 100.00

Case-VI Wt. avg. excluding Outliers 0.70 0.00 1.61 30.30 24.41 0.00 0.03 39.22 0.00 3.74 100.00

Summary of the raw material percentage mix

Sr. No Description NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Steam, % HSD, % Coal, % NGL, % Power, % Total, %

5 years average

Case-I Complete group 1.45 0.00 0.25 22.53 30.58 1.07 0.03 38.83 0.00 5.26 100.00

Case-II Excluding Outliers 0.00 0.00 0.44 29.75 26.27 0.00 0.05 39.67 0.00 3.82 100.00

3 years average

Case-III Complete group 0.68 0.00 0.43 22.83 29.67 0.89 0.03 41.02 0.00 4.44 100.00

Case-IV Excluding Outliers 0.00 0.00 0.75 31.94 23.43 0.00 0.05 39.78 0.00 4.03 100.00

Last year (01-02) average

Case-V Complete group 0.67 0.00 1.54 30.74 23.33 1.01 0.02 37.50 0.00 5.20 100.00

Case-VI Excluding Outliers 0.70 0.00 1.61 30.30 24.41 0.00 0.03 39.22 0.00 3.74 100.00

Annexure-IX

Group –V

Mixed Energy Based Plants

Group-V Mixed energy plants

General Information

Name of the unit

Year of

commissioning

Yearly

reassessed

urea capacityFeed/Fuel used Sp energy consumption (Gcal/ MT urea)

(MT)Main

feedstock/fuelOther inputs Design Guaranteed

Actual (avg.

of 5 yrs)

Actual

(2001-02)

GSFC 1967/1969 370600 NG, AG, Naphtha LSHS 8.411 8.411 7.546 7.054

RCF, Thal 1985 1485000 NG, Naphtha None 6.03 6.03 7.151 7.218

IFFCO, Kalol 1975/1997 544500 NG, Naphtha AG, LSHS 7.113 NA 6.757 6.528

Group-V Mixed energy plants

Actual Urea Production

Name of the unit

Yearly

reassessed urea

capacityYear

(MT) 1997-98 1998-99 1999-2000 2000-2001 2001-2002

GSFC 370600Actual

Production (MT)338240 357000 400930 337800 359300

Capacity

Utilisation (%)91.27 96.33 108.18 91.15 96.95

RCF, Thal 1485000Actual

Production (MT)1401750 1442900 1488585 1329400 1451150

Capacity

Utilisation (%)94.39 97.16 100.24 89.52 97.72

IFFCO, Kalol 544500Actual

Production (MT)421287 518030 471843 487809 550297

Capacity

Utilisation (%)77.37 95.14 86.66 89.59 101.06

Group- V Mixed Energy Based plants

Sr. No Name of the unit % of Naphtha used Yearly avg. urea Prodn. Specific energy consumption Gcal/ MT of Urea

MT (1997-98 to 2001-02) Feed Fuel Utilities Total

1 GSFC 17.78 358654 3.890 0.837 2.819 7.546

2 RCF, Thal 25.87 1422757 3.300 2.052 1.800 7.151

3 IFFCO, Kalol 28.43 489853 3.304 3.154 0.300 6.757

Wt. average 25.15 757088 3.394 2.098 1.637 7.129

Percentage of total energy, % 47.61 29.43 22.96 100.00

Outlier plant : None

Specific energy consumption

7.5467.151

6.7577.129

0

1

2

3

4

5

6

7

8

9

10

GSFC RCF, Thal IFFCO, Kalol Wt. average

Sp

ecific

en

erg

y,

Gca

l/ M

T

Specific energy consumption

7.546

7.151

6.757Avg. (7.129)

5.5

6

6.5

7

7.5

8

GSFC RCF, Thal IFFCO, Kalol

Sp

ecific

en

erg

y,

Gca

l/ M

T

Group- V Mixed Energy based plants Specific Energy Consumption, Gcal/ MT of Urea

Sr. No Name of the unit Year wise specific energy consumption Gcal/ MT of Urea % deviation

1997-98 1998-99 1999-00 2000-01 2001-02 Wt. Average from wt. average

1 GSFC 7.522 7.911 7.497 7.765 7.054 7.546 5.848

2 RCF, Thal 7.143 7.148 7.119 7.129 7.218 7.151 0.315

3 IFFCO, Kalol 6.876 6.787 6.867 6.776 6.528 6.757 -5.218

Weighted average 7.150 7.185 7.133 7.149 7.032 7.129 0.000

Wt. avg. excluding Outliers 7.150 7.185 7.133 7.149 7.032 7.129

Group-I 5 years average 3 years average Last year (01-02) average

Specific energy consumption Complete group Excluding Outliers Complete group Excluding Outliers Complete group Excluding Outliers

Gcal/MT urea 7.129 7.129 7.103 7.103 7.032 7.032

Outliers plants in a group :

Plants having deviation beyond (+/-) 20 % on weighted average specific energy consumption have been considered as outliers.

All the plants of the group including outliers have been considered while calculating above weighted average specific energy consumption.

Group- V Mixed Energy based plants

Specific Energy Consumption, Gcal/ MT of Urea

Specific energy consumption, Gcal/MT urea

7.52

2 7.91

1

7.49

7 7.76

5

7.05

4

6.5

7

7.5

8

8.5

9

1997-98 1998-99 1999-00 2000-01 2001-02

Gcal/M

T u

rea

GSFC (7.546)

Specific energy consumption, Gcal/MT urea

7.143 7.1487.119 7.129

7.218

7

7.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

RCF, Thal (7.151)

Specific energy consumption, Gcal/MT urea

7.1507.185

7.133 7.149

7.032

6.5

7

7.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

Avg. of group (7.129)

Specific energy consumption, Gcal/MT urea

6.87

6

6.78

7 6.86

7

6.77

6

6.52

8

6

6.5

7

7.5

1997-98 1998-99 1999-00 2000-01 2001-02

Gca

l/M

T u

rea

IFFCO, Kalol (6.757)

Group- V Mixed Energy based plants Summary

Sr. No Description % Raw Material Mix Sp. energy

NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % NGL, % Coal, % Power, % Total, % Gcal/ MT urea

5 years average

Case-I Complete group 60.87 4.60 25.04 0.00 5.95 0.18 0.00 0.00 0.00 3.36 100.00 7.129

Case-II Excluding Outliers 60.87 4.60 25.04 0.00 5.95 0.18 0.00 0.00 0.00 3.36 100.00 7.129

3 years average

Case-III Complete group 56.95 3.68 30.03 0.00 6.03 0.30 0.00 0.00 0.00 3.00 100.00 7.103

Case-IV Excluding Outliers 56.95 3.68 30.03 0.00 6.03 0.30 0.00 0.00 0.00 3.00 100.00 7.103

Last year (01-02) average

Case-V Complete group 49.35 4.62 37.10 0.00 5.77 0.88 0.00 0.00 0.00 2.28 100.00 7.032

Case-VI Excluding Outliers 49.35 4.62 37.10 0.00 5.77 0.88 0.00 0.00 0.00 2.28 100.00 7.032

Group- V Mixed Energy based plants Unitwise Raw Material Mix

Weighted Average for 5 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

1 GSFC 41.00 6.79 17.78 0.00 20.56 0.00 0.00 0.00 0.00 13.87 100.00

2 RCF, Thal 73.62 0.00 25.87 0.00 0.00 0.29 0.00 0.00 0.00 0.22 100.00

3 IFFCO, Kalol 37.90 16.96 28.43 0.00 12.28 0.00 0.00 0.00 0.00 4.44 100.00

Case-I Weighted average 60.87 4.60 25.04 0.00 5.95 0.18 0.00 0.00 0.00 3.36 100.00

Case-II Wt. avg. excluding Outliers 60.87 4.60 25.04 0.00 5.95 0.18 0.00 0.00 0.00 3.36 100.00

Weighted Average for 3 years

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

1 GSFC 49.15 1.22 16.20 0.00 21.45 0.00 0.00 0.00 0.00 11.98 100.00

2 RCF, Thal 65.89 0.00 33.47 0.00 0.00 0.48 0.00 0.00 0.00 0.17 100.00

3 IFFCO, Kalol 36.31 16.77 30.82 0.00 11.78 0.00 0.00 0.00 0.00 4.32 100.00

Case-III Weighted average 56.95 3.68 30.03 0.00 6.03 0.30 0.00 0.00 0.00 3.00 100.00

Case-IV Wt. avg. excluding Outliers 56.95 3.68 30.03 0.00 6.03 0.30 0.00 0.00 0.00 3.00 100.00

Latest year (2001-02)

Sr. No Name of the unit NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

1 GSFC 46.01 0.00 22.72 0.00 22.48 0.00 0.00 0.00 0.00 8.79 100.00

2 RCF, Thal 53.98 0.00 44.52 0.00 0.00 1.39 0.00 0.00 0.00 0.11 100.00

3 IFFCO, Kalol 38.23 21.35 25.59 0.00 10.80 0.00 0.00 0.00 0.00 4.03 100.00

Case-V Weighted average 49.35 4.62 37.10 0.00 5.77 0.88 0.00 0.00 0.00 2.28 100.00

Case-VI Wt. avg. excluding Outliers 49.35 4.62 37.10 0.00 5.77 0.88 0.00 0.00 0.00 2.28 100.00

Summary of the raw material percentage mix

Sr. No Description NG, % AG, % Naphtha, % FO, % LSHS, % Ex. Ammonia, % HSD, % Coal, % NGL, % Power, % Total, %

5 years average

Case-I Complete group 60.87 4.60 25.04 0.00 5.95 0.18 0.00 0.00 0.00 3.36 100.00

Case-II Excluding Outliers 60.87 4.60 25.04 0.00 5.95 0.18 0.00 0.00 0.00 3.36 100.00

3 years average

Case-III Complete group 56.95 3.68 30.03 0.00 6.03 0.30 0.00 0.00 0.00 3.00 100.00

Case-IV Excluding Outliers 56.95 3.68 30.03 0.00 6.03 0.30 0.00 0.00 0.00 3.00 100.00

Last year (01-02) average

Case-V Complete group 49.35 4.62 37.10 0.00 5.77 0.88 0.00 0.00 0.00 2.28 100.00

Case-VI Excluding Outliers 49.35 4.62 37.10 0.00 5.77 0.88 0.00 0.00 0.00 2.28 100.00

Annexure-X

INTERNATIONAL BENCHMARKING OF ENERGY CONSUMPTION FOR AMMONIA AND UREA PRODUCTION 1.0 Introduction

It is difficult to obtain authentic energy consumption data for ammonia and urea plants in other countries of the world. China, US and India are the 3 largest producers of ammonia and urea accounting for 41% of world ammonia and 47% of urea production in the year 2000. Some data for ammonia plants in US was made available to FAI by the International Fertilizer Development Centre (IFDC), Alabama on behalf of The Fertilizer Institute, USA. The data used in this report is based on the communication sent by IFDC vide their letter dated April 8, 1997 to DG, FAI for ammonia plant energy consumption. Energy consumption data for urea plants was not collected by IFDC. Information on Chinese plants is rather scarce and the only source available for energy consumption data is a paper presented in Production and Trade Committee Meeting of International Fertilizer Industry Association (IFA) in Shanghai in October, 2000. Data for average energy consumption of ammonia plants in the world is sourced from a paper presented in the Ammonia Safety Symposium of American Institute of Chemical Engineers (AIChE) in Montreal, Canada in January 2002. Authentic data on Indian industry is available as FAI collects energy consumption data for ammonia and urea plants. Data from these sources has been used in the present benchmarking.

2.0 Factors having bearing on energy consumption

There are a number of parameters such as feedstock, location, plant capacity and configuration, etc. which have bearing on the energy consumption of ammonia and urea plants. Impact of these parameters is discussed in the following paragraphs. 2.1 Feedstock

Types of feedstock used in various plants include natural gas, naphtha, fuel oil and coal in various parts of the world. Natural gas is the most preferred feedstock and requires the lowest energy per tonne urea. Quality of the feedstock also affects the energy consumption to some extent. In most countries where natural gas is available, ammonia is produced using natural gas as feedstock. In major urea exporting countries, 100% of ammonia/urea capacity is based on natural gas (Table 1). Other feedstock like naphtha, fuel oil and coal contribute to urea production only in those countries where sufficient natural gas is not available. China and India have substantial fertilizer capacity utilizing feedstock other than natural gas.

2.2 Vintage, Technology and plant configuration

Ammonia production technology has evolved over a long period of time and standard plant sizes were primarily governed by the maximum available sizes of key equipment. The first generation commercial plants commission in 1960‟s were of capacities of around 300-450 TPD and utilized reciprocating compressors. Advent of centrifugal compressors witnessed the construction of ammonia plants with capacity of 600 TPD or higher. This brought down the energy consumption of ammonia production significantly. Next generation ammonia plants were upscaled to 900-1000 TPD which resulted in further reduction in energy consumption. Last generation plants were of 1350 TPD which gave even better energy consumption. Thus, vintage, size, technology level and plant configuration determine the energy efficiency levels. For example, large single stream ammonia and urea plants using centrifugal compressors will have lower energy consumption than old, small size and multi-stream plants using reciprocating compressors.

2.3 Ambient Conditions

Ambient temperature has an effect on the level of energy consumption in ammonia and urea plants. Relatively high temperatures of cooling water and ambient air, such as in countries like India, result in higher energy consumption as compared to plants in colder countries. There is difference of almost 10° C in the average cooling water temperature in India as compared to USA, Europe, and even in China. This will make a difference in energy consumption in the two locations, other things being equal.

2.4 Product Slate of the Unit

The end use of ammonia for producing urea or some other product like ammonium nitrate or complex fertilizers has a bearing on ammonia plant energy consumption. Production of urea requires recovery of high purity carbon dioxide to the maximum extent possible. In fact ammonia plants using lean natural gas in India are not able to generate enough carbon dioxide for proportionate urea production. In such a situation, production of urea to the full capacity requires burning part of the synthesis gas as fuel in ammonia plants which results in higher energy consumption. In many countries where urea is not the final fertilizer product, complete recovery of high purity carbon dioxide is not required. This saves the energy consumption in CO2 removal section of ammonia plant as compared to a plant where complete recovery of carbon dioxide is made.

3.0 Energy accounting methods

Energy used in production of ammonia and urea plants is the total hydrocarbon feed and fuel used along with non-hydrocarbon sources like coal and power. The conversion of hydrocarbons to energy units can be done either on the basis of high heating value (HHV) or low heating value (LHV), the former being higher. There is import of power either from captive power plant or the grid to ammonia and urea plants. There is also

an import and export of steam to and from ammonia and urea plants. Conversion of these utilities from their own units to energy units is carried out using different conversion factors by different plants in the world as there is no universal standard for such conversions. FAI has been collecting energy consumption data for ammonia and urea plants in a standardized form since 1987-88. All feedstock and fuel are converted to energy using low heating value. The power imported to ammonia and urea plant is converted to energy using 1 KWH=2520 kcal conversion factor. Steam import/export is accounted for by using its enthalpy value. The energy consumption arrived at by such an accounting methodology reflects the battery limit ammonia and urea plants energy consumption. It does not take into account the conversion efficiencies of captive power plant and steam generation plant and therefore cannot be directly used for comparing the energy consumption of the entire complex. However, this may be comparable to methodology adopted in those countries where utilities like power are usually independent of ammonia production. From the above discussion it is evident that there are grey areas in source of data, non-comparable plant configurations and non-standardized energy accounting factors, and therefore a quantitative conclusion could not be drawn by comparing energy consumption data in different countries without first making the data comparable. The energy consumption figures should therefore be considered as ‘order of magnitude figures’ for drawing qualitative conclusion and for non-precise comparisons. A difference in energy consumption by a few percent should be viewed as “within the same band of energy efficiency” rather than ranking them higher or lower.

4.0 Comparison of Energy Consumption

4.1 Fertilizer plants in USA

Most of the ammonia plants in USA are based on natural gas as feedstock and therefore a comparison of their energy consumption data has been made with Indian gas based plants. There were 19 gas based plants operating in India in 1995-96. It can be seen from Table 2 that weighted average consumption of 9.16 mkcal/MT of ammonia for India gas based plants for the year 1995-96 is much lower than 9.94 mkcal/tonne average energy consumption of 42 US ammonia plants in 1995. Actual energy consumption of India urea plants is also lower by the same order of magnitude in comparison to urea plants in USA (Table 3), data for US plants having been derived from ammonia plant data.

4.2 Fertilizer plants in China

There are a large number of small and medium size fertilizer plants in China. Small and medium size capacity is predominantly based on coal, generally producing Ammonium Bicarbonate. Large size ammonia plants account for only about 30% of ammonia capacity in China. Most gas based ammonia plants in

China are of 1000 TPD capacity and were commissioned in 1990‟s. Comparison of Chinese gas based plants has therefore been made with standard size gas based plants in India excluding small size or mixed feed or very old technology plants. The comparison of energy consumption of Indian and Chinese plants is shown in Table 4. It can be seen that the energy consumption of 15 Indian gas based plants at 8.51 mkCal/tonne of ammonia during 1999-2000 is lower than 8.77 mkCal for 8 large size Chinese gas based ammonia plants. There are only a few naphtha based ammonia plants in China and all of them are of 1000 TPD capacity. These plants were commissioned around 1980. The Indian naphtha based ammonia plants have capacities in the range of 415 TPD to 1350 TPD and the vintage of several of them goes back to as early as 1969. The energy consumption of 3 Indian post-1980 naphtha based plants is 9.28 mkCal compared to 9.25 mkCal for 5 large size post-1980 Chinese plants (Table 4). Even the composite average of all naphtha based plants in India including small plants using reciprocating compressors is 9.81 mkCal per MT ammonia which is of the same order after normalizing for vintage and size. The derived average energy consumption figures for Indian and Chinese urea plants are shown in Table 5. The comparative figures are similar to those for ammonia plants. There are very few fuel oil based ammonia plants in the world. There are 7 fuel oil based plants in China all with the capacity of 1000 TPD. Most of these plants are utilizing modern technology and commissioned in 1980‟s and 90‟s. India had 6 fuel oil based plants operating during 1999-2000 Indian fuel oil based plants other than GNFC, Bharuch utilize very old Shell gasification technology. The efficiency of these 5 plants cannot be compared with Chinese plants which use different technology. The energy consumption level of the 7 fuel oil based Chinese plants was 10.92 mkCal per tonne of ammonia during the year 1999. Best energy consumption of GNFC plant was 11.45 during 2000-01. In any case use of fuel oil as feedstock, all over the world, had been resorted to on strategic considerations and not on economic considerations.

4.3 All world plants

Some available information on average energy consumption of world ammonia plants is shown in Table 6 & 7. It can be seen from Table 6 that average energy consumption of 25% most efficient Indian ammonia plants at 8.41 mkCal/MT is lower than 8.49 mkCal for the most efficient 25% ammonia plants in the world.

5.0 Conclusion

A comparison of energy consumption figures of ammonia, urea plants of the three largest producers in the world shows that energy consumption of Indian gas based plants is better than similar plants in USA and China. In case of naphtha based plants the energy consumption figures are nearly equal on comparable basis.

Table 1: Share of Natural Gas in Ammonia Production Capacity

Country Percent Share

USA >95

Italy 100

Ukraine 100

UAE 100

Iran 100

Kuwait 100

Saudi Arabia 100

Russia 100

Netherlands 100

World * 83

Source: Survey of Ammonia Capacities 2000, IFA, Paris

* Excluding mini plants in China.

Table 2: Energy Consumption Data USA & Indian Ammonia Plants

US Ammonia Plants (All Gas Based)

Daily Capacity, TPD <900 >900 Total/Weighted Average

No. of Plants in USA 13 29 42

Energy Consumption mkcal/MT (1995)

10.54 9.69 9.94

Indian Gas Based Ammonia Plants

Daily Capacity <900 * >900 Total/Weighted Average

No. of Plants 7 15 22

Energy Consumption mkCal/MT (1995-96)

11.59 8.88 9.16

Source: Ammonia Production Survey 1996 – International FertilizerDevelopment Centre, USA; FAI Data for Indian Plants.

* Small Indian plants included GSFC I & II, Namrup I & II and III, Trombay V and

Deepak Fertilizers & Petrochemicals Ltd., Taloja.

Table 3: Comparison of Urea Plant Energy of USA & Indian Plants (1995-96)

Average Energy (mkCal/MT)

Derived Avg. Energy for Urea Plants Based on US Ammonia Plants Energy (1995)

7.27

Energy Consumption of Indian Gas Based Plants (1995-96)

6.63

Table 4: Feedstock wise Energy Data of Indian and Chinese Ammonia Plants (1999-2000)

Indian Plants Chinese Plants

Feedstock No.of Plants Average Energy (mkCal/MT)

No.of plants Average Energy MkCal/MT)

Gas 15 8.51* 8 8.77

Naphtha 3 9.28** 5 9.25

* Excluding HFC, Namrup-III, Trombay-V & GSFC, Baroda which are either on mixed

feed, small size or very old technology. ** Indian Plants commissioned in 1980‟s. Source: Wang Wenshan, “The Status Quo of China‟s Synthetic Ammonia and Urea Production

Based on Natural Gas and Oil” – IFA Production and Industrial Trade Committee Meeting, 17-19 October, 2000. FAI Data for Indian Plants.

Note: 1. Gas based Ammonia Plants in India have designed capacity in the range of 900

TPD to 13500 TPD and of 1975 to 1998 vintage. 2. Chinese Gas based Ammonia Plants have capacity of 1000 TPD and vintage of

around 1990. 3. Naphtha based Ammonia Plants in India have designed capacity in the range of

415 TPD to 1350 TPD and of 1969 to 1999 vintage. 4. Chinese Naphtha based Ammonia Plants have capacity of 1000 TPD and

vintage of around 1980.

Table 5: Feedstockwise Energy Data of Indian and Chinese Urea Plants (1999-2000)

Indian Plants Chinese Plants

Feedstock Avg.Energy Consumption (mkCal/MT)

Derived Avg. Energy of Urea Plants based on Chinese Ammonia Plants (mkCal/MT)

Gas 6.10* 6.29

Naphtha 6.43 6.76

* Excluding HFC, Namrup-III, Trombay-V & GSFC, Baroda which are either mixed

feed or small size plants.

Table 6: Comparison of Energy Consumption of World Ammonia Plants (1996-97)

Plants Average Energy (mkCal/MT)

25% Most Energy Efficient Plants in India 8.41

25% Most Energy Efficient Plants in the World

8.49

Source: Ved Gupta and Brennan Borserio, “Retrofit Experiences with a 32 year old Ammonia

Plant” – Ammonia Plant Safety & Related Facilities, vol.42, AIChE-2002. FAI Data for Indian Plants.

Note: Energy Consumption for Urea Plants can be calculated by assuming the following: Ammonia Consumption per MT Urea = 0.58 MT Utility Consumption in Urea Plants, New = 1.2mkCal/MT urea Old = 1.5mkCal/Mturea

Table7: Comparison of Energy Consumption of World Urea Plants (1996-97)

Plants Average Energy (mkCal/MT)

25% Most Energy Efficient Plants in India 6.06

25% * Most Energy Efficient Plants in the World

6.22

* Derived from Ammonia Plant Energy consumption Data.

…