Need For Fertiliser Plant

Agriculture is one of the crucial components of Nepal’s economy. It carries the huge prospect of transforming the national economy, constrained by many structural problems. The country’s sluggish manufacturing can be attributed to the declining growth, shortage of jobs and shabby social sector infrastructure. So, there is an urgency to develop the agro sector, with appropriate and clear policies and sufficient investment. Irrigation, improved seeds, fertilisers, equipment and workforce form basic elements for agriculture. But there is a deficit of these factors hindering its production and productivity.

One chronic problem Nepali farmers have been facing every year is the acute shortage of chemical fertilisers needed to enhance the quality of soil.  Come the time of the plantation of the crops, farmers have to fret over the availability of fertiliser. There is no supply of fertiliser in a sufficient amount. As we do not have the fertiliser plant, the country has to import it from abroad, spending at least Rs. 40 billion annually.  The government provides a 60 per cent subsidy on the purchase of the fertiliser. Annually, the country needs around 800,000 tonnes of chemical fertiliser, including urea, DAP and potash but overall supplies barely surpass 500,000 tonnes. For the past two to three years, their import and supplies have not been more than 400,000 tonnes.

In order to overcome the shortage of chemical fertiliser, the country has been mulling over setting up its plant for the last fifty years. Many regimes and political systems came and went, but no government succeeded in setting up the fertilizer factory.  Two feasibility studies were conducted in 1984 and 2015.  A recent Detailed Feasibility Study Report (DFSR), prepared by the German-based DIAG Industries GmbH, has proposed establishing the fertiliser factory on the BOOT model. It will be built at the estimated cost of USD 714 million in 150 bighas of land in Bardaghat, Nawalparasi. Investment Board Nepal, which has assigned the German company, is expected to sign a MoU with it to initiate further works after going through the report. 

According to a news report of this daily, the company has proposed three options for installing the plant: natural gas, electricity, and a combination of both. It has also been suggested to set up the plant in a public-private partnership where foreign investment will be 70 per cent and domestic 30 per cent. It will have the capacity of producing 700,000 tonnes of urea fertiliser yearly. It will be completed within three years after the start of its construction.  It is now up to the experts and authorities to analyse the proposal and make a decision. The opening of the fertiliser factory will prove a boon for Nepali farmers, who lack incentives to get engaged in the agro sector that employs over 62 per cent of the population and contributes nearly 24 per cent to Gross Domestic Product (GDP).

In yet another development, the Koshi Provincial Government has taken an initiative to open a urea fertiliser factory based on green hydrogen and carbon capture technology. In the past few years, the government has attached priority to setting up the fertiliser factory by including it in policies, programmes and budgets but no definite action plan has been taken so far. Given that a good chunk of the budget goes for importing chemical fertiliser and farmers have difficulty in getting it in time, the government must not drag its feet in establishing it to modernise agriculture and achieve self-reliance on agro products.