Govt removes restrictions on urea imports from Iran

PRESS TRUST OF INDIA
Posted: Thursday, May 03, 2012
New Delhi: The government on Wednesday said it has removed restrictions on urea imports from Iran and has asked State Trading Corporation (STC) to modify the global tender, which restricts bids by suppliers of Iranian origin.

The restriction was imposed by STC in view of Iran’s decision to ban urea exports and also due to default by three traders who were to supply urea from Iran in a tender floated by Indian Potash (IPL) in March this year.

“STC’s tender is yet to be opened and our Ambassador in Iran has informed us that although there is a ban on urea exports, export permits are being given by the Iranian government on case-to-case basis,” fertiliser ministry secretary Ajay Bhattacharya told PTI.

Keeping in view the report of the Ambassador, he said the ministry has informed STC to modify the terms of the tender by removing the restriction on Iranian urea.

On April 26, STC had invited global bids for import of urea worth R300 crore on government account, but it had put a condition that the crop nutrient should not be of Iranian origin. The last date for submitting bid is May 4.

Besides export ban, Bhattacharya said, STC had imposed this condition as some suppliers, who were sourcing urea from Iran, had failed to export urea to India in earlier tender.

“For 2012-13, a tender was floated through Indian Potash Ltd (IPL) in early March this year and bids from 3 suppliers, which were the lowest, were finalised. These suppliers were to supply urea from Iran,” the secretary said.

After few days, however, they informed that the Iranian government has put restrictions on export of urea till the spring season, which is understood to be June, he added.

“Since urea was urgently needed by us for the ensuing kharif (summer) season, it was decided to float another tender through STC with a rider that supply from Iran should not be accepted since the suppliers may again back out due to export restrictions,” Bhattacharya added.

In the meantime, the ministry asked India’s ambassador to Iran to take up the issue with the Iranian government on the problems faced by IPL suppliers in sourcing the key nitrogenous crop nutrient in the first tender, he said.

According to an official source, the three suppliers had quoted a price of $386 per tonne for urea in the tender floated by IPL, while the global prices at that time were in the range of $410-440 per tonne.

Since the price quoted by the three suppliers was lower than the prevailing international rates, their bids were accepted, but their backing off at the last moment had left government with no alternative but to restrict future urea contracts from the Gulf nation.

India usually imports around 6 million tonne of urea every year, which includes about 2 million tonne from OMIFCO, Oman.