A shift to green ammonia would help cut India’s fertilizer subsidy burden and boost energy self-reliance by reducing dependence on imports of expensive liquified natural gas (LNG) for fertilizer manufacturing, says a report by the Institute for Energy Economics and Financial Analysis (IEEFA).
India’s fertilizer subsidy is estimated to be close to ₹1.05 trillion ($14.2 billion) for 2022-23, the third year in a row it has exceeded ₹1 trillion. But high and volatile global gas prices, exacerbated by the Russia-Ukraine war, have pushed fertilizer prices to record levels, making it likely that the subsidy will have to be increased drastically.
Gas prices increased nearly three-fold from $10.75/MMBtu (metric million British thermal unit) in January 2021 to $33.00 in January 2022. Global urea prices soared to record highs of $690-794/tonne (₹51.4-60.4/kg) between October 2021 and March 2022. However, retail price of urea for the Indian agriculture sector remained at a subsidised ₹5.3/kg ($71/tonne), reflecting the heavy subsidy of more than 90% on the global benchmark price of urea.
