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‘Soaring’ global gas prices: India’s $14bn fertiliser budget to increase

‘Soaring’ global gas prices: India’s $14bn fertiliser budget to increase

As gas prices continue to rise unabated, the reliance of India on imported liquefied natural gas (LNG) as a fertiliser feedstock could see the government increasing its US$14bn (Rs1 trillion) fertiliser subsidy budget, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA).

The ripple effect caused by the ongoing Russia-Ukraine conflict has exposed vulnerabilities across the entire industrial gas supply chain, from natural gas and LNG to rare gases used in microchips such as neon.

With natural gas the main input (70%) for urea production – a key fertiliser – India’s heavy reliance on imported LNG could see the Indian government set to increase its budgeted US$14bn fertiliser subsidy.

Massive trade sanctions imposed on Russia could also impact India’s supply of fertiliser, leading to ‘soaring’ prices globally, revealed report author Purva Jain, Analyst and guest contributor, IEEFA.

Urea continued to be supplied to the agriculture sector at a uniform statutory notified price, despite a 200% increase in gas prices from US$8.21/MMBtu (metric million British thermal unit) in January 2021 to US$24.71/MMBtu.

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