Due to increasing tension in West Asia, there is increasing concern about energy supply all over the world, but the Indian government has taken a big step in time. The government is preparing a war chest of about Rs 600 crore for LNG, so that gas can be purchased immediately if needed. Its direct objective is that the fertilizer manufacturing plants in the country do not face gas shortage and the production continues continuously.
Actually, gas is very important for fertilizer production. If the supply of gas decreases, it can directly impact agriculture and farmers. Keeping this in mind, the government has decided to prepare this fund, so that any sudden shortage can be met immediately.
Why increased concern?
Due to the ongoing tension between Iran and Israel, uncertainty has increased on important sea routes like the Strait of Hormuz. This route is considered very important for the world’s energy supply. If there is any obstruction here, it can have a major impact on the gas supply. According to the Business Standard report, if this tension continues for a long time, the availability of gas may reduce from 70% to 50-60%. In such a situation, prices may also increase rapidly and this will directly impact import dependent countries like India.
Sharp rise in LNG prices possible
According to energy sector experts, the prices of LNG (Liquefied Natural Gas) in Asia may increase by 40%. This means that buying gas will become expensive and production costs will also increase. However, this war chest of the government is being prepared to deal with this situation. With this, the supply can be kept stable by purchasing gas immediately from the spot market.
Fertilizer plants will get big support
At present, India’s urea plants meet a large part of their gas requirement through long-term contracts, while some part is purchased from the spot market. If there is a reduction in supply, production may be affected. The government is now preparing to buy more gas from the spot market, so that the plants do not have to be closed and production continues continuously. With this, farmers will also continue to get fertilizer on time.
Big preparations before Kharif season
The demand for fertilizer increases significantly during the Kharif season in India. At present the country needs crores of tonnes of urea every year. In such a situation, if the supply of gas is affected, production may reduce and dependence on imports may increase. The government wants to avoid this situation, so it is already making preparations. About 37 urea plants in the country are dependent on gas and a major part of their cost depends on it.
What will be its effect?
Common people will get direct benefit from this step of the government. Lack of gas will not affect fertilizer production, which will not cause any crisis to farming. Besides, the impact of sudden rise in prices can also be controlled to a great extent.
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