2007...Policies boost investment in Petrochemicals

In a major move to boost investment in the Petrochemical Sector the government came up with the National Policy on Petrochemicals and the Petroleum, Chemical and Petrochemical Investment Regions.

PCPIR Policy
The Petroleum, Chemical and Petrochemical Investment Regions (PCPIR) policy released on 8th May, 2007 envisages establishment of investment regions with world-class infrastructure with both center and states playing key roles. The Government of India will ensure availability of external physical infrastructure including rail, national highways, ports, airports and telecommunication facilities in a time bound manner through public-private partnership. The State Governments will be responsible for providing all physical infrastructure and utilities linkages like power, water, sewerage, health, safety and environmental concerns. It will give a thrust to industrialization in the regions by way of setting up of down-stream units.The PCPIR an investment region of 250 sq. kms is expected to have 40% area designated as processing area having manufacturing facilities for domestic and export led production of petroleum, associated logistics and other services & infrastructures and 60% area designated as non-processing area having commercial and other social & institutional infrastructure.Investment in the external infrastructure in each of the PCPIRs would be about Rs.8,000 crore to Rs.14,000 crore.

So far four proposals from the States of Andhra Pradesh, Karnataka, Gujarat and West Bengal have been received for hosting PCPIRs.

National Policy on Petrochemicals
The “National Policy on Petrochemicals” was released on 28th September, 2007.. The Policy resolution aims to increase investments in the sector, capture a slice of resurgent Asian demand in polymers, creating quality infrastructure to ensure value addition and increase exports.The other objectives include to increase the domestic demand and consumption of plastics and synthetic fibres and to increase the use of petrochemicals in thrust areas.The existing per capita domestic polymer consumption of 4.7 kg is likely to rise to 12 kg as compared to the existing world average of 25 kg. per capita. National Policy on Petrochemicals envisages an investment of Rs.36,000 crore in thenext five years

Assam Gas Cracker Project
A Joint Venture Company M/s Brahmaputra Cracker & Polymer Limited (BCPL) was incorporated on 8th January, 2007 following an agreementin this regard. The Prime Minister Dr. Manmohan Singh laid the foundation stone ofM/s BCPL of Assam Gas Cracker Project at Lepetkata in Dibrugarh district on April 09, 2007.BCPL signed the feedstock supply agreement with ONGC for this project on 15th October,2007. The 2,80,000 tonnes per annum gas cracker plant is being set up at the cost of Rs.5460 crore. The Department of Chemicals and Petrochemicals has released Rs.30 crore during the year 2007-08 towards Capital Subsidy for implementation of the project.The Ministry of Chemicals and Fertilisers will monitor the implementation of the project through a high-powered committee led by the Secretary, Department of Chemicals and Petrochemicals. This Project is likely to generate substantial employment both direct as well as indirect.

National Pharmaceutical Policy
The draft National Pharmaceutical Policy, 2006 submitted to the Cabinet on 29.12.2006 for its approval was referred to a Group of Ministers (GOM) on 11.01.2007 after consideration. A GOM has since been constituted and it held two meetings on 10.04.2007 and 12.09.2007.No time frame has been given forfinalisation of the pharma policy. In the meantime government has taken several steps to ensure availability of medicines at affordable prices. The Government has recommended to the Department of Revenue for exemption of Customs and Excise Duty for all anti cancer drugs.

Pharmaceutical Advisory Forum
The Pharmaceutical Advisory Forum set up by the Ministry of Chemical and Fertilisers has unanimously recommended that 20 per cent of the MP-LAD and MLA-LAD funds should be earmarked for medical treatment of poor people. This proposal found strong support from Parliamentary Consultative Committee of the Ministry. The Forum under the Chairmanship of Minister of Chemicals and Fertilisers constituted for a comprehensive dialogue amongst all the stakeholders on various issues concerning Drug Policy held its third meeting on 15-05-2007 and took the following decisions.

Working Group on Health Insurance, Drug Banks, District Illness Assistance Fund and Cancer Assistance has been constituted under the Chairmanship of JS(PI).ThisWorking Group met twice on 18.07.2007 and 04.10.2007.

Working Group on Consumer Awareness on Drug Prices, Generic Drugs and other related issues has been constituted under the Chairmanship of Chairman NPPA.This Working Group has given its recommendations to be furnished by NPPA in the form of a report.

The phase II of the Neem Project was launched on21st Feburary,2007 to promote Neem based,cost effective,ecofriendly biodegradable pesticide, an alternative to chemical pesticides.

NIPERs
The Union Cabinet has given in principle approval for setting up of six National Institutes of Pharmaceutical Education & Research (NIPER) at Ahmedabad (Gujarat), Hyderabad (Andhra Pradesh), Hajipur (Bihar), Kolkata (West Bengal), Rae Bareli (Uttar Pradesh) and Guwahati (Assam). Four of them at Ahmedabad, Hyderabad, Hajipur and Kolkata have started working from this academic session 2007-08.With these institutes there would be seven NIPERs in the country and each would cost approximately Rs. 200 crores. These national level institutes will cater to excellence in education and research in pharmaceutical sciences.

Fertiliser
Department of Fertilisers has taken a number of steps to ensure timely and adequate availability of fertilisers throughout the country.

Pricing Policy
The Government has approved the Stage III of New Pricing Policy on 1.2.2007 Urea units.The policy is based on the recommendations of the Alagh Committee.It aims at augmenting indigenous production (particularly nitrogenous fertiliser), inducing conversion from naptha, FO/LSHS to gas based plants, having concession schemes for decontrolled phosphatic and potassic fertilisers and encouraging investment in joint venture projects abroad where gas is readily available at reasonable prices.

Subsidy
Inspite of increase in cost of fertilisers the farmers have been kept insulated from its effects by increasing subsidy allocations.It is estimated that in last 5 years 88% of the increase in subsidy is due to sharp increase in international prices of fertilisers inputs and finished fertilisers while only 12 per cent increase is attributed to the enhanced consumption of fertilisers.The total fertiliser subsidy for this year 2007-08 is Rs. 47979 crores as compared to Rs. 25952 crore last year.

The issue of nutrient based subsidy/concession is under consideration of the Group of Ministers (GoM) and will apply to all phosphatic and Potassic fertilisers when approved.

Availability and movement of fertilisers
Many steps have been taken to ensure proper movement and distribution of fertilisers throughout the country. Under the new pricing scheme Stage III, the subsidy on urea will be paid only after it reaches the district level.The freight on movement of urea will be paid on actual rail and road leads. The Rail freight will be paid as per the actual expenditure on the basis of composite road transport index.75% of the month’s requirement will be pre-positioned by the first of every month in each state.

Fertiliser Monitoring System (FMS)
For monitoring availability and movement of fertilisers the Department launched a web-based on-line Fertiliser Monitoring System (FMS) (www.urvarak.co.in) with effect from 22.01.07.This system enables to track dispatch, receipt and sale of fertiliser in each district of the country against the approved plan.

For further movement and distribution States have to put their machinery in place effectively.

FMS consist of 3 modules: Company module captures the data at the company end, Payment module deals with subsidy payment based on the monthly sale/dispatch made by the company.The public domain module is a website based interface with the public.

Revival of PSUs
Under the UPA Government’s Common Minimum Programme efforts are on to revive sick industry by restructuring and modernizing public sector units.The Financial restructuring package for Fertilisers and Chemicals Travancore Ltd. (FACT), the only fertiliser company in Kerala was sanctioned.Pursuant to a decision taken on April 2007 the Government has initiated the process of examining the feasibility of revival of closed fertiliser units of HFC and FCI, subject to availability of gas. Specfically, Rashtriya Chemical Fertilisers (RCF)has shown interest in the Durgapur and Talchar Units; National Fertilisers Ltd. (NFL)in Barauni and Ramagundam Units; and Krishak Bharti Cooperative Ltd. (KRIBCO) have shown interest in the Gorakhpur unit. For FCIL-Sindri & Korba and HFCL-Haldia, the Chief Ministers of the states of unit’s locations have been requested to consider equity participation.

Conference
Department of Fertilisers (DoF) oraganised a conference of the State Agriculture Minister on 29th January, 2007 to discuss issues relating to countrywide supply, distribution and availability of fertilisers.The meet proved to be a meaningful interaction and active coordination between Department of Fertilisers and the State Governments.The State Governments were advised to strengthen the state institutional agencies for streamlining the fertiliser supplies by coordinating with manufacturers, importers, dealers, farmers and transporters.

Joint Ventures
To augment the supply of fertiliser in the long run initial talks have been held for joint ventures for production of urea in Saudi Arabia, Kuwait, Nigeria, Egypt and Mozambik.The Government is considering joint venture project in phosphorous rich countrieslike Tunisia, Algeria, Morocco and Jordan.