Kathmandu: It seems appropriate to establish and operate a chemical fertilizer factory in Nepal.

The Preliminary Study Committee for the Establishment of Chemical Fertilizer Factory formed under the coordination of Finance Minister Bishnu Prasad Poudel has prepared a report with suggestions to establish and operate a fertilizer factory based on natural gas technology.

“From the point of view of initial capital investment, return on investment and profitability, it seems appropriate to set up a fertilizer factory based on natural gas technology compared to other technologies,” the report said.

Prime Minister KP Sharma Oli receiving a study report on establishing a chemical factory in Nepal, on March 14, 2021. (Photo: ET)

The report also states that the establishment of a fertilizer factory based on natural gas technology will be a sustainable solution to the supply of manure and will contribute to the economic development of the country by increasing agricultural production and productivity.

The Committee has concluded that the subsidy amount provided by the government could be saved by setting up a fertilizer factory based on natural gas technology in Nepal for the time being, out of which natural gas, thermocol and water electrolysis technology are in vogue for the production of chemical fertilizers globally.

The Committee has suggested that the initial investment of Rs. 103 billion for the establishment of chemical fertilizer factory based on natural gas technology.

It was suggested to operate the project in a public-private partnership modality.

The report states that the obligation to import chemical fertilizers using foreign exchange worth about Rs 16 billion annually as an opportunity for manure production based on natural gas technology will be eliminated, trade deficit will be reduced and farmers will be able to get fertilizer on time.

Similarly, management of capital, attraction of investors, selection of suitable place for setting up of factories, investment and construction have been mentioned as challenges for setting up a fertilizer factory.

The officials of the Committee presented the study report on the chemical fertilizer factory in Nepal and its findings to Prime Minister KP Sharma Oli on Sunday.

On the occasion, Prime Minister Oli said that although it would be appropriate to go for natural gas technology for the time being, it was necessary to conduct a detailed study on water electrolysis technology as raw materials are available in Nepal.

There is a demand of about 800,000 metric tons of manure in Nepal and it is estimated that the potential demand for chemical manure will increase to about 2 million metric tons in the next few years as the use of chemical manure methods and results are increased based on crop diversification.

A meeting of the Council of Ministers of the Government of Nepal formed a committee comprising the Minister of Industry, Commerce and Supplies and the Minister of Agriculture and Livestock Development under the coordination of the Finance Minister to conduct a preliminary study on the establishment of chemical fertilizer factory in Nepal.