India’s Ministry of Chemicals and Fertilizers mulls relook at chemical feedstock allocation process

In a bid to cope with feedstock shortage in the chemical and petrochemical sector, the ministry of chemicals and fertilizers has suggested a relook the allocation process, as per Business Standard. It says in line with the National Chemical Policy, the government needs a policy for allocation of feedstock to best-suited products, rather than based on priority sectors. Officials explained that natural gas should be a priority for the fertilizer sector, coal for power and naphtha for petrochemicals, rather than the current approach of treating a sector as the priority and all available feedstock distributed as priority to it. To ensure supply of critical stock for the petrochemical sector, the ministry has suggested adoption of a consortium cracker approach for developing capacities. Under this, each Petroleum, Chemical and Petrochemical Investment Region (PCPIR) should have naphtha cracker, set up by government sector undertakings, but private downstream companies would be encouraged to hold equity in the unit, depending on their requirement of the products they would use. According to the current policy, the set up and operations of the entire unit are held by the PSU and it supplies the product to downstream players. Private companies could enter into long-term pay contracts to ensure supply and the unit could have an independent economic viability, explained an official source. For this approach, the PCPIR policy needs to be reviewed which has been recommended in the plan as well. Officials explained the potential of the chemical sector is huge. A conservative estimate puts the growth rate at 11%, a turnover of US$224 bln by 2017. Currently, the plan, which envisages India to be a hub for research and development for the subcontinent and neighbouring countries, has been opened for seeking public views.
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