SUMMARY REPORT 2021

ESTABLISHING A FERTILIZER PLANT IN NEPAL:

A COMPARATIVE STUDY AND ANALYSIS OF
NATURAL GAS VS WATER ELECTROLYSIS TECHNOLOGY

GOVERNMENT OF NEPAL
INVESTMENT BOARD NEPAL
SUMMARY REPORT - 2021

ESTABLISHING A FERTILIZER PLANT IN NEPAL:

A COMPARATIVE STUDY AND ANALYSIS OF
NATURAL GAS VS WATER ELECTROLYSIS TECHNOLOGY

I
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Cover Photo: Darbin Joshi, CIMMYT

SUMMARY REPORT - 2021

FOREWORD

" The Government of Nepal

(GoN) has prioritized the
establishment of a chemical
fertilizer plant owing to the
perennial shortage of fertilizers
and increasing concerns over
food security.

Investment Board Nepal (IBN), as an apex government this study to compare the two different urea production
agency, remains committed to contributing in realizing the technologies. The study has also considered the chang-
objectives of socio-economic development through the ing times and technologies to determine the technology
implementation of mega-projects. Over a decade, it has and other relevant information required for the two differ-
facilitated several largescale PPP and private investment ent fertilizer production technology and suitability.
projects which remain critical to bolstering sustainable
economic growth and development. Among multiple pro- The development modality for the establishment of a
jects in different sector of economy, the establishment of a chemical fertilizer plant best fits public-private partnership
chemical fertilizer plant in Nepal is one of the transforma- as it is directly related to the nation’s food security and
tive projects under IBN purview for development. the construction of a plant requires national resources and
decision interventions. However, determining the type of
The Government of Nepal (GoN) has prioritized the estab- PPP contract would need further deliberation in the up-
lishment of a chemical fertilizer plant owing to the peren- coming days.
nial shortage of fertilizers and increasing concerns over
food security. The relevant government agencies and the I believe that this comparative analysis shall provide sub-
current fiscal budget have also highlighted the neces- stantial inputs for informed decision-making in opting for
sity of such a project in Nepal. Furthermore, the budget an appropriate approach for project development through
speech of fiscal year (FY) 2021/22 envisioned establish- further analysis and wider discussion with stakeholders.
ing a chemical fertilizer plant within three years.

In this context, there were two different studies carried out

by JICA and IDecK to study the prospect of establishing
a urea-based chemical fertilizer plant in 1984 and 2017
respectively. JICA study emphasized water electrolysis
technology, while IDecK focused on natural gas technol- Sushil Bhatta
ogy for manufacturing urea. Against this backdrop, an in- Chief Executive Officer
house team of multidisciplinary experts at OIBN undertook Investment Board Nepal

III
SUMMARY REPORT - 2021

TABLE OF CONTENTS

CHAPTER 1 1
Introduction 1

CHAPTER 2 2
Literature Review On Studies 2

CHAPTER 3 5
Land Distribution, Cropping Patterns, And Fertilizer Consumption In Nepal 5

CHAPTER 4 7
Project Requirements 7

CHAPTER 5 9
Production Process 9

CHAPTER 6 11
Financial Analysis 11

CHAPTER 7 13
Economic Analysis 13

CHAPTER 8 15
Socio-Environmental Impact Analysis 15

CHAPTER 9 16
Findings & Conclusion 16

V
ESTABLISHING A FERTILIZER PLANT IN NEPAL

VI
CHAPTER 1
SUMMARY REPORT - 2021

INTRODUCTION

"
The Government of Nepal (GoN) has prioritized the estab-
lishment of a chemical fertilizer plant because of a peren-
nial shortage of fertilizers and increasing concerns over
Each of the studies conducted
food security. Relevant government agencies and the cur-
rent fiscal budget have highlighted the necessity for such
by JICA and IDeck focused
a project in Nepal. The GoN had also pointed out the need on a single method for
for a detailed study on the electrolysis of water, an innova- manufacturing urea, water
tive green technology, for fertilizer production. The budget electrolysis and natural gas
speech of fiscal year (FY) 2021/22 envisions establishing
a chemical fertilizer plant within three years. A plan to con-
respectively.
duct a comparative study and analysis of natural gas vs
water electrolysis technology is also included in the Office
of the Investment Board Nepal (OIBN) Annual Plan for FY
2021/22. The primary objective of this study is to assess the most
suitable technology and development options for the es-
The GoN has undertaken two major studies on the pros- tablishment of a chemical fertilizer plant in Nepal. The
pect of establishing a chemical fertilizer plant in Nepal. specific objectives of the study are:
The first, a feasibility study conducted by Japan Interna- (i) To conduct a comparative analysis of two different
tional Cooperation Agency (JICA) in 1984, focused on us- technologies (natural gas and water electrolysis) used
ing water electrolysis technology to produce urea fertilizer. in the fertilizer production process
The second study was done in 2015 by the consortium of (ii) To understand the technical knowledge required for
Infrastructure Development Corporation (Karnataka) Ltd., the two different fertilizer production processes (natu-
India, the Institution of Agricultural Technologists, and ral gas and water electrolysis)
Shah Consult International Pvt. Ltd. (IDeck). The study (iii) To analyze the physical and other infrastructure facili-
focused on using natural gas technology as a suitable op- ties required for the different fertilizer production pro-
tion to produce urea in Nepal and compared three feed- cesses
stock options – natural gas, coal, and water using elec- (iv) To determine the financial viability of the project, and
trolysis for ammonia and urea synthesis. The factors used (v) To understand the appropriate technology and devel-
to determine suitability were technology, energy intensity, opment models while considering international market
and production cost. trends, national interests, and national requirements.

Each of the studies conducted by JICA and IDeck for man- The study uses a literature review and key informant inter-
ufacturing urea focused on water electrolysis and natural views (KII) as part of its research methodology. A literature
gas respectively. OIBN conducted this study to compare review of the JICA, IDeck and other available reports, in-
the two different urea production technologies. It takes cluding various online journals, was conducted. Similarly,
into consideration the technical knowledge, the changing the study team conducted KIIs with representatives from
global context, and available technologies to analyze the relevant government line agencies and other concerned
two different fertilizer production processes. stakeholders to obtain the required primary information.

1
CHAPTER 2 PLANT IN NEPAL
ESTABLISHING A FERTILIZER

LITERATURE REVIEW ON
STUDIES

"
Review of the detailed feasibility study
report (DFSR) on a urea fertilizer plant in
Nepal - IDeck The project cost for setting up a
The GoN envisions establishing an ammonia urea com- urea plant using the three feedstock
plex in Nepal. To determine if this project has merit, the options was evaluated. The total
GoN through OIBN carried out a detailed feasibility study
capital cost of the project was
(DFS) for setting up a fertilizer complex.
worked out to be USD 665 million for
The OIBN conducted a DFS to explore the technical and natural gas, USD 953 million for coal
financial feasibility of whether a urea plant could be es- gasification, and USD 1,305 million
tablished in Nepal. The consortium of Infrastructure De-
for water electrolysis.
velopment Corporation (Karnataka) Ltd., India in associa-
tion with the Institution of Agricultural Technologists and
Shah Consult International Pvt. Ltd. (IDeck) was selected
to conduct the study on the proposed chemical fertilizer
plant in Nepal. The contract between the consortium and
IBN was signed on December 18, 2015. The DFS was natural gas was the most suitable feedstock in terms of
conducted and submitted to OIBN in June 2017. technology, energy intensity, and product cost point com-
petitiveness. Possible means for procuring and sourcing
The DFS estimates that demand for urea in Nepal is about natural gas from across the borders of Nepal are dis-
700,000 metric tons per year as per GoN’s data. This was cussed in the report.
estimated based on the total cultivable land available in
Nepal, the major crops in the country, and their cropping The project cost for setting up a urea plant using the three
patterns via-a-vis productivity. It states that certain inter- feedstock options was evaluated. The total capital cost of
ventions like awareness programs on the use of urea, the project was worked out to be USD 665 million for natu-
adopting best practices in the administration of urea, etc. ral gas, USD 953 million for coal gasification, and USD
can be adopted by the government to efficiently and ef- 1,305 million for water electrolysis. This includes costs
fectively use urea manufactured in Nepal. The capacity towards inside battery limit (ISBL), outside battery limit
of the proposed fertilizer plant with a production capacity (OSBL), and off-site facilities.
of 700,000 metric tons per year is based on the demand
estimation made by the government. The cost-benefit analysis was carried out to assess the
option of importing fertilizers vis-à-vis domestic produc-
The study for a suitable site for setting up the urea ferti- tion. It estimated that the net annual outflow after set-
lizer plant was confined to the potential areas identified by ting up a 700,000 metric ton per year capacity urea plant
the government. The study recommended the alternative would be about USD 86.6 million which is significantly less
2 site in Dhalkebar as a suitable location for the plant. It than the corresponding outflow when importing urea. The
estimated that approximately 400 acres of land would be current GoN figures for net outflow is as high as USD 186
required to set up the plant. million per annum.

Three feedstock options – natural gas, coal, and water us- The government must make an equity investment of USD
ing electrolysis – for ammonia and urea synthesis were 221.74 million in the project during the construction period
assessed for the fertilizer plant. The study concluded that and provide a subsidy outflow of USD 86.60 million per

2
SUMMARY REPORT - 2021

annum during the operations period under the base case The production process, as mentioned in the feasibility
to make the urea affordable to farmers. study for urea production, was to react ammonia (pro-
duced from the reaction of hydrogen and atmospheric
If the GoN intends to implement the project through private Nitrogen) with carbon dioxide recovered from the cement
sector participation, it might require the government to of- plant flue gas. The hydrogen is produced from water elec-
fer additional incentives (grant financing as a percentage trolysis method.
of the estimated project cost) to the tune of USD 66.16
million, USD 131.5 million, and USD 196.24 million as a The study concluded that construction of a urea fertilizer
grant for 10 percent, 20 percent, and 30 percent of the to- plant with a 275 metric ton per day capacity was possible
tal project cost respectively during the construction period which would be in Hetauda with an area of 500 m x 200
to attract private investment. m on the west side of Hetauda Cement Limited. The on-
stream target for the chemical fertilizer plant was set for
Review of ‘A Feasibility Study Report on 1991. The assumption was based on access to electric
the Establishment of Urea Fertilizer Plant power of 76.1 MW by Nepal Electricity Authority, 32,450
Nm3/h cement plant flue gas supplied through Hetauda
in the Kingdom of Nepal – JICA'
Cement Industry, 76.8 metric ton per day coal imported
In 1984, the then GoN envisioned establishing a urea fer- through India, and the self-supply of industrial water and
tilizer project in Nepal as the agriculture sector contributed atmospheric air.
to around 60% of the nation’s gross domestic product
(GDP). The main purpose was to promote the domestic
Policy History in the Fertilizer Sector in
production of fertilizers through the efficient utilization of
indigenous resources, primarily water and hydropower.
Nepal
The events and policies related to fertilizer sector in Ne-
For this, Nepal had requested the Government of Japan pal are highlighted below in chronological order (Source:
for technical assistance to conduct a feasibility study on World Bank, 2016).
the establishment of a urea fertilizer plant. The project • 2009 to 2022 BS - The National Trading Centre imported
cost was estimated to be USD 144.79 million (with USD fertilizers to Nepal from Russia and China.
119.87 million in foreign investments and USD 24.92 mil-
• 2023 to 2030 BS - The government formed the Agriculture
lion in local investments) with a financing plan of 30 per-
Inputs Company (AIC) to import and distribute fertilizers
cent equity and 70 percent loan.
at commercial terms without subsidies. The major
sources for AIC to import fertilizers were India and other
In 1982/83, the estimated chemical fertilizer consump-
international markets. The use of fertilizer was low in
tion was 22,900 Nutrient tons of Nitrogen, 7,200 Nutrient the hills and mountain areas due to high costs.
tons of phosphorus, and 900 Nutrient tons of potassium.
Against this backdrop, the consumption of nitrogen had • 2031 to 2055 BS - The government introduced and
increased steadily with an annual growth of 17 percent provided subsidies for the transportation and use of
averaged for the period between 1966/67 to 1982/83, chemical fertilizers. The price subsidies on chemical
while that of phosphate fertilizer was stagnant, and that fertilizers were applicable to all farmers, whereas
of potassium decreased. The demand for Nitrogen was transport subsidies were only applicable to farmers
projected to grow to 33,383 tons by the year 2000 corre- from the hill and mid-hill regions.
sponding to 72,600 tons of urea.
• 2052 BS - The government published the Agriculture
Perspective Plan, where fertilizers were recognized as
Although the financing source had not been identified, the
a primary input to enhance agricultural productivity, and
interest rate for the 70 percent loan proportion of the total
set a target to increase fertilizer use to 131 kilograms
project cost was estimated at 5 percent of the base project
per hectare by 2015 AD(2072 BS).
cost and price contingency estimated at an escalation of
3.5 percent of foreign currency. The repayment period for • 2056 to 2067 BS - Government subsidies were
the foreign loan was estimated to be 15 years from the withdrawn and the market liberalized following the
date of commercial operation. The interest rate for short Agriculture Perspective Plan. Liberalization was marked
term financing was 15 percent per annum with a repay- by:
ment period of one year.

3
ESTABLISHING A FERTILIZER PLANT IN NEPAL

o Informal imports of fertilizers of unknown and unverified subsidies were initially targeted at marginal farmers,
quality who had land-holding of less than 4 hectares in the Terai
o Increased private sector participation in fertilizer and less than 0.75 hectares in the hills. Paddy, wheat,
importation and distribution. maize, and millet were initially the targeted crops. After
o A remarkable decline in formal imports of fertilizers after the reintroduction of subsidies, private companies could
liberalization not compete with the government’s subsidized price of
o Rising fertilizer prices further opened the market for fertilizers.
cheap fertilizers of unknown quality.
o During this time, around 80 percent of subsidized • 2068 BS to present - The government relaxed its
fertilizers were sold in the Kathmandu valley. focus on marginal farmers and specific crops of paddy,
wheat, maize, and millet and all types of farmers
• 2059 BS - The government formed the Agriculture began benefitting from the subsidies program. The
Inputs Company Limited (AICL) to import and distribute government also issued the Organic Fertilizer Subsidy
fertilizer, and the National Seed Company Limited was Directives and the Organic and Biofertilizer Working
charged with seed distribution. Procedure. These policies provide subsidies on the
purchase of domestically produced fertilizers that
• 2067 BS to present - After the decrease in agriculture meet their criteria. A high-level subsidy distribution
inputs seen during the liberalization era, the government management committee decides the rate and quantity.
reintroduced subsidies. The government assigned District-level committees are responsible for the actual
AICL and the Salt Trading Corporation to sell fertilizers distribution. The main organic fertilizer distributed under
via cooperatives to farmers at subsidized rates. These this program is Vermi-Compost Manure.

4
CHAPTER 3
SUMMARY REPORT - 2021

LAND DISTRIBUTION, CROPPING

PATTERNS, AND FERTILIZER
CONSUMPTION IN NEPAL

"
According to the Agriculture and Livestock Diary (2076),
Nepal has a total cultivated area of 3,091,000 hectares
which is 21 percent of the total land available. Similarly, an
In terms of demand projection,
additional 1,030,000 hectares of land is available for cul-
tivation (i.e., 7 percent of total land). As per the Irrigation
the demand for rice is expected
Master Plan (2019) there are 11 different projects out of to increase from 4,478.2
which five projects have alternative infrastructure variants thousand tons in 2020 to
to increase water supply and expand irrigated land. As 5,638.1 thousand tons by 2035.
per the National Planning Commission (2018), 2,265,000
hectares are irrigable out of 2,641,000 hectares of arable
This indicates an increase in
land. As of FY 2018/19, infrastructure had been built to rice demand by 26 percent.
irrigate 1.43 million hectares of land.

Major crops are determined by their area of cultivation,

productivity and profitability. Considering these factors,
rice is the major crop produced in Nepal followed by wheat, Pattern of Chemical Fertilizer
maize, and vegetables. Rice yield is expected to grow to Consumption in Nepal
3,840 kg/ha by 2031 and 3,903 kg/ha by 2043 respec-
Fertilizer consumption measures the amount of nutrients
tively. In comparative terms, rice production is expected
used per unit of arable land. The agriculture perspective
to increase by 14.99 percent in 2043 from 2014/15 level
plan (1995-2015) aimed to increase consumption to 150
while wheat and maize are expected to increase by 14.38
kg/ha by 2015. However, the consumption pattern of fer-
percent and 7 percent respectively. In terms of demand
tilizers from 1999-2018 shows the use of fertilizers gradu-
projection, the demand for rice is expected to increase
ally declined from 1999 to 2008. A major factor for this
from 4,478.2 thousand tons in 2020 to 5,638.1 thousand
was the removal of subsidies on the price and transpor-
tons by 2035. This indicates an increase in rice demand
tation (for selected hill and mid-hill districts) of chemical
by 26 percent. Similarly, demand for wheat, maize, and
fertilizers. This led to an increase in the price of fertilizers.
potato is expected to increase by 26 percent, 26 percent,
As farmers were obliged to purchase chemical fertilizer
and 39 percent respectively.
on their own, fertilizers became less affordable which ul-
timately led to a dwindling in their use. However, on March
Contribution of Inputs in Yield Increment 25, 2009, the GoN reintroduced the fertilizer subsidy pro-
An increase in the production of these major agro-prod- gram which again led to an increase in fertilizer consump-
ucts is subject to the availability of year-round irrigation tion. The demand for fertilizers is high in the Terai region
facility, fertilizers, and improved seed quality among other followed by the hills and high hills region. Among major
things. These pre-requisites are dependent on the level of crops, rice production requires significantly higher fertiliz-
research and the extension of agricultural services. The ers followed by maize and wheat. In the case of Nepal,
contribution of a variety (improved seed), irrigation, and rice accounts for 65 percent of total fertilizer consumption.
their interaction (irrigation * variety) to yield an increment For rice production, 20 kg/h of nitrogen, 100 kg/h of DAP,
was 30 percent, 29 percent, and 41 percent respectively and 60 kg/h of Potash is required.
(Thapa and Pokhrel, 2003).

5
ESTABLISHING A FERTILIZER PLANT IN NEPAL

Types of Chemical Fertilizers in Nepal Import Price, Sales Price, and Subsidy on
There are seven types of fertilizers being used in Nepal: Major Chemical Fertilizers in Nepal
urea, diammonium phosphate (DAP), muriate of potash The current price to import urea is NPR 112 per kg, DAP is
(MOP), ammonium sulphate (AS), single super phosphate NPR 114 per kg, and Potash is NPR 98 per kg. Similarly,
(SSP), ammonium phosphate sulphate (APS), and nitro- the sales price of urea is NPR 15 per kg, DAP is NPR 44
gen, phosphorous and potassium (NPK). Among them, per kg, and Potash is NPR 32 per kg. Overall, the subsidy
the GoN has subsidized 3 types of chemical fertilizers provided on Urea is NPR 97 per kg which is 86.6 percent
(urea, DAP, and MOP) for distribution through AICL and of the import price. For DAP, the subsidy provided is NPR
STC. Urea is the most consumed chemical fertilizer in Ne- 70 per kg which is 61.4 percent of the import price, and for
pal followed by DAP and MOP. Potash, it is NPR 66 per kg which is 67.34 percent of the
import price (Source: AICL).

6
CHAPTER 4
SUMMARY REPORT - 2021

PROJECT REQUIREMENTS

"
The infrastructure required for both natural gas and elec-
trolysis technology is discussed in this chapter.

Urea production with

Land Availability
electrolysis mainly requires
According to iDeck’s report, 400 acres of land is required
power, water, and carbon
for a urea plant (producing 701,250 metric tons of urea per
year) using natural gas technology at the two proposed dioxide. So, the project site
sites at Dhalkebar – Alternative I and Alternative II. On needs to be planned based on
the other hand, urea production with electrolysis mainly their availability in the proximity
requires power, water, and carbon dioxide. So, the pro-
of the urea plant.
ject site needs to be planned based on their availability in
the proximity of the urea plant. The study team assumes
that approximately 500 acres of land is required for a urea
plant using electrolysis.
Water Required
Electricity Required The chemical fertilizer plant should have access to water
The electricity required for a urea plant running on natural sources, a running river and ground water are both re-
gas would be 180,000 unit per day whereas a urea plant quired to go through the water treatment plant prior to the
running on electrolysis will need 10,800,000 unit per day. manufacturing process.
This has been elaborated below.
Requirement of water to produce one metric ton of hydro-
Electricity required to produce 1 metric ton of hydrogen: gen: According to The Energy and Resources Institute
The electricity required to produce 1 metric ton of hydro- (TERI) (2020), electrolysis requires nine liters of fresh wa-
gen from electrolysis is in the range of 48,950 to 50,000 ter to produce one kilogram of hydrogen (and eight kilo-
units of electricity. grams of oxygen). To produce one metric ton of hydrogen
through water electrolysis, 9,000 liters of fresh water is
Electricity required to produce 1 metric ton of ammonia: required. According to IDeck, the production of one metric
Historically, the energy consumed by the Haber-Bosch ton of hydrogen through electrolysis requires 11,126 liters
process for synthesizing ammonia to produce a metric ton of fresh water.
is about 12 MWh (i.e., 12,000 units of electricity).
Requirement of water to produce one metric ton of am-
Electricity required to produce 1 metric ton of urea: To pro- monia: It was found that 1,500 liters of water is required to
duce 1 metric ton of urea from the reaction of NH3 and produce one metric ton of ammonia.
CO2, 160 units of electricity is required.
Hence, it can be concluded that to produce one metric ton
The proposed plant has a capacity of producing 2,125 of hydrogen, one metric ton of ammonia and one metric
metric tons of urea per day. So, to produce this quantity of ton of urea using water electrolysis, the cumulative water
urea through the electrolysis process, the total electricity required is around 21,906 liters. On the other hand, the
required would be around 10,800 MWh per day (around water required for the natural gas process is 9,280 liters
450 MW per day). per ton of urea production.

7
ESTABLISHING A FERTILIZER PLANT IN NEPAL

A blacktopped road with a minimum width of 40 feet is that the International Finance Corporation (IFC) has set
required for a chemical fertilizer plant. wastewater generation standards for straight run nitrog-
enous fertilizer urea at five cubic meters per metric ton
A natural gas-based fertilizer plant requires around 15 MW of urea produced or its equivalent, and consumption at
of electricity for the same manufacturing capacity. A 400 15 cubic meters per metric ton of urea produced or its
kV transmission line is needed for urea production using equivalent.
green hydrogen.
A urea plant that uses natural gas as feedstock will require
For natural gas technology, establishing a centralized ef- human resources from other countries. For instance, hu-
fluent water treatment plant as a component of chemical man resources with such expertise are available in India
fertilizer plant is more appropriate. IDeck’s report states as the technology is being used and is well known there.

8
CHAPTER 5
SUMMARY REPORT - 2021

PRODUCTION PROCESS

"
Production of Urea Using Natural Gas
Urea can be produced artificially through the synthesis re-
action of carbon dioxide with ammonia at a pressure of Urea is made from ammonia
21 MPa and temperature of 180 °C. For commercial use, and carbon dioxide. The
urea is mainly produced in a solid form, either as prills or ammonia and carbon dioxide
granules depending on the finishing process being used.
Urea was first produced industrially by hydrating calcium
are fed into the reactor at high
cyanamide (CaCN), but the easy availability of ammonia pressure and temperature, and
led to the development of the ammonia/carbon dioxide the urea is formed in a two-step
technology. reaction.
Ammonia is synthesized from hydrogen (from natural gas)
and nitrogen (from the air). Natural gas contains some sul-
furous compounds which can damage the catalysts used
in this process. These are removed by using zinc oxide. The urea contains unreacted ammonia, carbon dioxide,
The methane from the natural gas (natural gas mostly and ammonium carbamate. As the pressure is reduced
comprises of methane) is then converted to hydrogen and heat applied, the NH2COONH4 decomposes to NH3
through steam reforming. and CO2. The ammonia and carbon dioxide are recycled.
The urea solution is then concentrated to give 99.6 per-
cent weight by weight molten urea and is then granulated
for use as a fertilizer and chemical feedstock.

Water, carbon monoxide, and carbon dioxide (all of which Natural gas (NG) or Re-gasified Liquid Natural Gas
poison the iron catalyst used in ammonia synthesis) are (RLNG) is the most widely used feedstock to manufacture
removed. The carbon monoxide is converted to carbon ammonia. The Wobbe Index for natural gas falls between
dioxide for use in urea production: 12,800 and 11,500 Kcal/Nm3. The only other gas which
has a comparable Wobbe Index is Methane which falls be-
tween 12,700 and 11,500 Kcal/Nm3. Natural gas primarily
Remaining traces of CO and CO2 are converted to meth- comprises of up to 96 percent to 98 percent of methane. It
ane and the gases are then cooled until the water be- is considered to be the best possible feedstock to manu-
comes liquid and can be easily removed. The nitrogen facture both ammonia and carbon dioxide and thereby,
and hydrogen are then put under high temperature and urea. However, there are currently no known sources of
pressure using an iron catalyst to form ammonia through natural gas available in Nepal. This means natural gas
the Haber-Bosch process. would need to be transported to the project site from other
countries like India or Bangladesh in the Indian sub-conti-
Urea is made from ammonia and carbon dioxide. The am- nent through pipelines.
monia and carbon dioxide are fed into the reactor at high
pressure and temperature, and the urea is formed in a There is a need to procure and secure natural gas, on a
two-step reaction. long-term basis, of up to 1.33 million standard cubic me-
ters per day. Provision for expansion must be made in line

9
ESTABLISHING A FERTILIZER PLANT IN NEPAL

with this capacity. If the plant is to operate with a 10% tion. To manufacture 2,125 metric ton per day of urea,
higher capacity margin, a corresponding provision for ap- 1,573 metric ton per day of CO2 is required (i.e., for 1
proximately 1.46 million standard cubic meters of gas per metric ton per day of urea, 0.7402 metric ton per day of
day must be made available. CO2 is required).

Production of Urea Using Water The total CO2 emission from cement productions in Nepal
Electrolysis for 2019 was estimated at 3.45 ± 0.50 million metric tons
(Thakuri, et. al, 2021). A cement plant with an installed
Hydrogen Production from the Electrolysis of Water:
capacity of about 2,400 metric ton per day can generate
Electricity from AC power, excluding solar power, needs
flue gas from which 1,573 metric ton per day of CO2 could
to be converted into DC power via a rectifier which then
be extracted (IDeck, 2016). Hence, 3,932.5 metric ton
splits the water into hydrogen and oxygen in a fuel cell
per day CO2 could be extracted from Cement plants like
with electrolytes (mostly alkaline electrolytes such as KOH
Hongshi with a capacity of 6,000 metric tons per day. As
& NaOH). The hydrogen that is produced is dried and
per the internal study conducted by OIBN in July 2020,
stored in a tank. The oxygen is sent into the atmosphere.
the total production of clinker from 20 clinker producing
The system does not capture oxygen gas but capturing
cement industries is around 21,109 metric ton per day. So,
the highly pure oxygen gas is a possibility, allowing it to be
the total amount of CO2 that could be extracted from such
supplied as a by-product. The plant is expected to function
cement industries is around 13,835 metric ton per day.
at least 23 hours a day and at a maximum 24 hours a day
over 330 days in a year. Based on the provided data, a study was conducted by
Kathmandu University for a system which was designed
Production of Ammonia: Essentially, all the processes
for 250,000 ton/year carbon capture, and it was found
employed for ammonia synthesis are variations of the
that for 700,000 tons of urea, 1,200,000 metric tons per
Haber-Bosch process developed in Germany from 1904-
year CO2 capture is needed. The cost of capturing is USD
1913. This process involves the reaction of hydrogen and
0.086 per kg of CO2 but cost will be lower when done at a
nitrogen under high temperatures and pressures with an
larger scale. The data that was used for simulation com-
iron-based catalyst. The source of nitrogen is always air.
prised of 15 percent CO2 by weight, but usually cement
flue gas has 25-30 percent CO2.
Production of Urea: The manufacturing of urea is pos-
sible using water electrolysis. However, to manufacture
Based on the IDecK report and the study conducted by
urea, water electrolysis alone will not suffice as the urea is
Kathmandu University, the daily requirement of CO2 for 1
manufactured through a combination of ammonia and car-
metric ton of urea is found to range from 0.7402 metric ton
bon dioxide. In the water electrolysis process there is no
to 1.71 metric ton.
carbon compound unlike in other technologies that uses
natural gas and coal gasification where the CO2 is gener- Experimental CCS Facility in a Cement Plant: An ex-
ated as part of the process and is consumed to manu- perimental CCS facility is installed in one of the cement
facture the urea. Hence, there is a challenge in sourcing plants in Belgium as part of a European research project
carbon dioxide. that aims to capture carbon with the process namely “Di-
rect Separation”. The cement factory covers about 70
A possible solution could be the recovery of carbon diox-
hectares and employs 180 workers which produces 1.4
ide from nearby flue gases of power plants, cement plants,
million tons of cement per year. According to Jan Theulen
or similar such process units. Such a process is called
(Director of Alternative Resources, Hiedelberg Cement,
carbon capture and storage (CCS).
Germany), with the production of 1 ton of cement, 0.6 ton
of CO2 is generated which mainly comes from the raw
Carbon Capture and Storage (CCS): The worldwide in-
materials. So, to capture such CO2, a research project is
stalled capacity of CCS is around 40 metric tons per an-
being executed in the premises of the cement factory that
num. Typically, CCS design and construction costs are in
has installation of 60 m tall structure (i.e., reactor) that is
the hundreds of millions, sometimes billions, of US dollars.
trapping 5 percent of the total emitted CO2 of the cement
plant. The researchers aim to trap 95 percent of CO2 in
Flue gases from cement kilns are good candidates for
the coming days. In addition to this, there are other experi-
CCS. Their typical CO2 concentrations are around 14-33
mental plants of carbon capture in Norway and China with
percent higher than from conventional coal-fired combus-
the process namely “Chemical Absorption”.

10
CHAPTER 6
SUMMARY REPORT - 2021

FINANCIAL ANALYSIS

"
A detailed and comprehensive financial model was pre-
pared and various financial inputs on technology, project
cost, source of financing, debt arrangements, revenues, The estimated project
operating costs, working capital requirements, and cost of construction cost under water
capital is estimated to compute financial output parame-
electrolysis techonology
ters like the internal rate of return (IRR), net present value
(NPV), project payback period, debt service coverage ra-
including all the components
tio (DSCR), cost of production, and a breakeven analysis. mentioned and interest during
the construction period is
Project Construction Cost estimated at USD 1,897 million.
The total project construction cost under the natural gas
option includes the main plant equipment cost, other Source of Finance
equipment cost, offsite facilities cost, engineering fee cost,
The funds that will be required to construct the project
project management charges, land development fees, net
would be raised through debt and equity. It is assumed
commissioning expenses, and contingency expenses.
that 75 percent of the total fund requirement would be
The total project construction cost including interest during
covered by debt and the remaining 25 percent by equity
the construction period is estimated at USD 1,251 million.
stocks. The funds will initially be raised as equity while the
remaining portion of the cost will be covered by debt.
The total project construction cost under the water elec-
trolysis option includes the main plant equipment cost,
other equipment cost, offsite facilities cost, engineering FEEDSTOCK REQUIREMENTS
fee cost, project management charges, land development Raw Material for the Natural Gas Option.
fees, net commissioning expenses, and contingency ex-
The primary raw material required under this alternative
penses. The estimated project construction cost including
is natural gas. It is estimated that 14,377,886 metric mil-
all the components mentioned above and interest during
lion British thermal units (MMBtu) natural gas per year will
the construction period is estimated at USD 1,897 million.
be required for the manufacture of urea from the fertilizer
plant. The consumption of natural gas is computed based
Cost of Production on the estimated energy consumption of the fertilizer plant
Cost of production refers to the costs a company incurs running at 100 percent capacity. The unit price of natural
from manufacturing a product or providing a service that gas is considered at USD 2.80 per MMBtu with an infla-
generates revenue for the company. Production costs can tion rate of 3 percent per year which is the price available
include a variety of expenses, such as labor, raw mate- and expected in the global market, particularly the United
rials, consumable manufacturing supplies, and general States. In addition to this, 65,078 units of 100 cubic me-
overhead. The cost of production per metric ton at 100 ters of raw water is required yearly for production at the
percent plant capacity (i.e. 701,250 metric ton of urea expected rate of USD 2.75 per 100 cubic meters.
fertilizer per annum), is calculated at USD 278.88 under
the natural gas option and USD 656.31 under the water Raw Material for Water Electrolysis Option
electrolysis option during the initial year of operation. The
Energy and water are the fundamental raw materials re-
cost of production per unit of urea from water electrolysis
quired under the water electrolysis option. It is estimated
is 2.36 times higher than production through natural gas.
that electricity of 5,080 kWh per metric ton is required per

11
ESTABLISHING A FERTILIZER PLANT IN NEPAL

year under the water electrolysis method. The tariff rate urea production. The levelized cost per metric ton of urea
per kWh of energy is calculated at USD 0.07 based on the is calculated at USD 363 and USD 694 under natural gas
industrial tariff rate in Nepal. Additionally, 80,000 units of and water electrolysis respectively. The levelized cost per
100 cubic meter of raw water are required yearly for the metric ton of urea production through the water electroly-
plant at the rate of USD 2.75 per 100 Cubic Meter. sis process is 1.91 times higher than through the natural
gas technique.
Sales price of urea
The cost-plus pricing method is used to compute the sales Viability Gap Funding
price of urea under both options. Cost-plus pricing, also The equity IRR of the fertilizer plant under natural gas op-
called markup pricing, is a method for determining the cost tion is computed at 7.06 percent which is less than the
of a product to a company. It is the sum of fixed and vari- cost of capital of the project. Hence, there is a need for
able operating costs, adding a percentage on top of that viability gap funding (VGF) to make the project attractive
price to determine the sales price set for the consumer. and viable to the private sector. It is estimated that no VGF
The fair sales price for urea is set at a 16 percent markup is required for the electrolysis option since the sales price
above the cost of production for both the natural gas and is very high due to the higher cost of production. A VGF
electrolysis method for the project to be self-sustaining amounting to 30 percent of the project’s capital cost re-
while also removing the need for government fertilizer sults in an equity IRR of 15.36 percent and would be via-
subsidies. Based on this, the sales price of urea is taken ble to attract private investors in the natural gas technique.
at USD 324 per metric ton for the natural gas method and
USD 761 per metric ton for the water electrolysis method. ALTERNATIVE CASE STUDIES
The sales price of urea under the water electrolysis op-
I. Natural Gas technique
tion is 2.35 times the sales price of the natural gas option,
• Based on the assumption that the natural gas pipeline
which does not seem feasible.
cost will be borne by Nepal Oil Corporation (NOC), the
total project construction cost is calculated at USD 714
The annual demand for chemical fertilizers in Nepal was million, and the cost of production is computed at USD
700,000-800,000 metric tons in 2011/12 (Source: Nepal 204 per metric ton.
Economic, Agriculture and Trade Activity (NEAT)). This
demand has gradually increased over the years. How- • If the pipeline cost is included, the project seems to be
ever, no research has been conducted to determine the financially viable at a sales price of USD 392 per metric
actual demand of chemical fertilizers in the recent years. ton without the need for viability gap funding.
In Nepal, urea is currently imported, and the AICL & STC
procure and distribute it to farmers at a fixed price that is • If the pipeline cost is excluded, the project seems to be
lower than the price at which urea is imported. The govern- financially viable at a sales price of USD 312 per metric
ment pays AICL a subsidy for the difference. The plant's without the need for viability gap funding.
overall urea production capacity is 2,125 metric tons per
day. It is assumed that 100 percent of the urea generated II. Water Electrolysis technique
will be purchased by government agencies and consumed • Based on the assumption that power will be available
to the fertilizer plant at a subsidized rate of NPR 3 per
in the local market.
kWh, the cost of production is computed at USD 436
per metric ton. The project seems to be financially
Levelized Cost viable at a sales price of USD 507 per metric ton without
The levelized cost of the fertilizer manufacturing asset can the need of viability gap funding.
be thought of as the average total cost of building and op-
erating the asset per unit of urea fertilizer produced over • Based on the assumption that power will be made
an assumed lifetime. The levelized cost is related to the available to the fertilizer plant at free of cost, the cost of
production is computed at USD 308 per MT. The sales
concept of assessing a project’s net present value. It is a
price of the Urea after adding 16% mark up on cost
measure of the average net present cost of fertilizer pro-
of production is calculated at USD 358 per MT. At this
duction for a manufacturing plant over its lifetime. The lev-
sales price, the equity IRR is computed to be 12.5% and
elized cost per unit of urea production under both options seems to be feasible without the need of viability gap
is calculated to assess and compare the two methods of funding. The payback period is calculated at 11.30 years.

12
CHAPTER 7
SUMMARY REPORT - 2021

ECONOMIC ANALYSIS

The Nepalese economy is mostly dependent on agricul-

"
ture, with agriculture accounting for roughly one-third of
the country’s gross domestic product (GDP). Agriculture is
the primary source of income for around two-thirds of the
The present value of subsidies
country’s population. The demand for agrochemicals has on the import of urea over the
been steadily increasing as agriculture has become more project term of 27 years is
commercialized in recent years. Chemical fertilizers are computed at USD 2,625 million
the most significant agricultural input, however, fertilizers
whereas the VGF at 30% of the
are frequently unavailable. Even if fertilizers are available,
the quantity supplied is not enough. This seriously impacts project cost amounts to USD
agriculture yield. 355 million.

In Nepal, the supply of fertilizers continues to fall far short

in 2020/21 respectively, which is a significant amount for a
of demand. The state-owned AICL and the public corpora-
small economy. Imports increased to NPR 1.53 trillion, but
tion STC, the two government bodies responsible for the
exports stayed at NPR 141 billion. In 2009-10, the cost for
import and distribution of chemical fertilizers are unable
agricultural commodities imports was NPR 44.43 billion.
to supply and distribute fertilizer in a timely, reliable, and
In the last ten years, it has increased by roughly eightfold.
commercial manner. Another noticeable hindrance is that
Over the course of a year, the trade imbalance increased
a huge amount of chemical fertilizer is being imported
by 27.26 percent. The worrying depletion of the country’s
from India through illegal means, since there is a huge
foreign exchange reserves due to excessive imports and
gap between the prices of chemical fertilizers between the
minimal exports have clearly necessitated the implemen-
two countries. Much of these fertilizers imported through
tation of efficient measures to cut imports. It seems crucial
illegal means are adulterated.
that the government’s import-driven strategy needs to be
replaced with a production-driven program.
According to Nepal Rastra bank, Nepal’s foreign ex-
change reserves fell to USD 11.42 billion from USD 11.75
billion in the first month of the new fiscal year 2021/22, Built Vs Buy
while imports increased by 75.7 percent to NPR 150.73 According to the Customs Department’s records, a total
billion (USD 1.26 billion). Similarly, the Department of Cus- of 274,202 metric tons of urea was imported into Nepal
toms reported that imports increased by 75.86 percent to in 2077/78, totaling NPR 13.09 billion. The import price
NPR 314.51 billion (USD 2.64 billion) in the second month per unit of Urea is calculated at USD 401, ignoring ad-
of the current fiscal year 2021/22. Further, in the fiscal ditional costs such as shipping, handling charges, dealer
year 2020/21, Nepal increased its agricultural commodi- profit, and so on. The imported urea is subsequently sold
ties import bill by 30 percent year on year, bringing it to a to consumers at a minimum price of USD 115 per metric
whopping NPR 325 billion. Previously, Nepal’s agricultural ton. As a result, the government suffers a significant sub-
imports in fiscal year 2019/20 were estimated to be worth sidy cost of USD 287 per metric ton during fertilizer sales.
around NPR 250 billion. While overall imports surged by The value of imported goods and the government's sub-
28.66 percent to NPR 1.53 trillion in the fiscal year 2020- sidy outflow have both increased in recent years. Despite
21, the import of agricultural goods increased by more the fact that the government has a large outflow of subsi-
than 30 percent, bringing agro products’ portion of the to- dies every year, chemical fertilizer related issues such as
tal import bill to 21 percent. Following edible oil, cereal inadequacy, poor availability, quality, and so on have not
imports climbed by NPR 22.71 billion in a year, surpass- changed significantly over time. The establishment of a
ing the NPR 79 billion in fiscal year 2020/21. Maize and chemical fertilizer facility in Nepal will be critical in remov-
wheat imports totaled NPR 16 billion and NPR 12 billion ing the present barriers that farmers face.

13
ESTABLISHING A FERTILIZER PLANT IN NEPAL

The cost of producing urea under water electrolysis meth- In comparison to the subsidized sales price from import,
od is higher than the cost of producing urea by natural gas the sales price of urea produced by fertilizer plants is high-
method. Whereas it is evident that the cost of producing er. However, the production of chemical fertilizers in house
urea fertilizer by natural gas method is cheaper than the will be critical in overcoming the country’s present fertilizer
cost of importing it. The cost of producing urea fertilizer is system challenges. Given the additional financial and eco-
predicted to be further reduced by a viability gap funding nomic benefits that fertilizer manufacturing in the country
of 30 percent in the natural gas method. Similarly, unlike would offer in the coming years, the sales price of the urea
annual subsidy payments, viability gap financing is a one- produced under natural gas is assessed to be competitive
time expenditure that the government is required to cover and marketable to consumers. However, the availability
during the project’s construction phase as a proportion of and transport of gas to the project site in the natural gas
the total cost. Further, the cost of the VGF is significantly method poses a huge challenge due to lack of pipeline
lower for the government than the cost of subsidies. The infrastructures, and the difficulties in importing natural gas
present value of subsidies on the import of urea over the from Western countries to Nepal.
project term of 27 years is computed at USD 2,625 million
whereas the VGF at 30% of the project cost amounts to The sales price of urea produced through water electroly-
USD 355 million. sis is high and poses marketability risks to the fertilizer
produced.

14
CHAPTER 8
SUMMARY REPORT - 2021

SOCIO-ENVIRONMENTAL IMPACT
ANALYSIS
Chemical fertilizer industries may cause several environ-

"
mental and social impacts. Emissions from urea prilling
towers, wastewater generated from the urea plant, solid
wastes including hazardous wastes, public opposition due
to various factors such as air pollution and the smell from
The site should consider
ammonia, are some of the concerns that need to be miti- resettlement issues so that
gated. These impacts would, however, be studied in detail the land acquisition process is
in the Initial Environmental Examination (IEE) phase, as easier.
mandated by Environmental Protection Rules 2020. While
conducting due diligence for site selection, environmen-
tal and social factors also need to be considered. These
would include avoiding or keeping a safe distance from
environmentally sensitive areas and dense vegetation,
studying the impact of potential hazards from landslides, electrolysis produces considerably less carbon dioxide
flooding, and proximity to water resources, etc. The site emissions when producing ammonia (approximately 0.38
should consider resettlement issues so that the land ac- t CO2 eq. per ton of ammonia) than through natural gas
quisition process is easier. Ideally, the plant should be using Haber Bosch process (approximately 1.5 t CO2 eq.
situated far away from major settlements to avoid any po- per ton of ammonia). Although mitigation projects funded
tential social issues in the locality. through international climate financing such as the Green
Climate Fund and Global Environmental Facility do not
In terms of water consumption for urea fertilizer produc- address green hydrogen projects currently, there is huge
tion, the water electrolysis process is more water intensive potential for such projects to be considered in climate fi-
(cumulatively consuming approx. 21,906 liters of water for nancing instruments in the future. In addition, green hy-
1 metric ton of hydrogen, 1 metric ton of ammonia, and drogen projects may also generate revenues from clean
1 metric ton of urea) than natural gas process (consum- development mechanisms through the sale of emission
ing approx. 9,280 liters of water for 1 metric ton of urea). credits, provided the international carbon price becomes
While comparing the Green House Gas emissions, water attractive.

15
CHAPTER 9 PLANT IN NEPAL
ESTABLISHING A FERTILIZER

FINDINGS & CONCLUSION

This study has concluded that the production of urea with The production of hydrogen using water electrolysis is
natural gas technology and water electrolysis are sub- gradually becoming technically and commercially viable in
jected to various conditions based on the nature of the the global scenario. The cost of green hydrogen produc-
plant. There is a natural gas pipeline planned by NOC, tion using water electrolysis is also predicted to reduce
from Bhairahawa (Lumbini Province, Nepal) to Gorakhpur drastically by 2030. However, the manufacturing of urea
(Uttar Pradesh, India) covering 129 kilometers. It is dif- using water electrolysis is not technically and commercial-
ficult for NOC to make a clear choice in constructing the ly feasible at present because the carbon capture technol-
pipeline since the quantity and scale of businesses such ogy is still in developing phase. However, ammonia-based
as steel, urea, and ammonia are not able to guarantee fertilizers other than urea can be produced using green hy-
natural gas demand. In the case of adopting natural gas drogen. In addition, hydrogen (gas/liquid) can be exported
technology, NOC stated that continuity for natural gas flow to neighboring countries. In the meantime, hydrogen fuel
seems more reliable from the Jhapa section of Province can be used as an alternative to power fuel-cell vehicles.
No.1 by tapping into the Eastern India (i.e., Patna [Bihar]- There is a need to conduct a separate comprehensive
West Bengal-Guwahati [Assam]) section. study to explore the possibility of hydrogen fuel in Nepal.

Considering various factors such as the availability of wa- There is no doubt that green hydrogen produced through
ter sources, electric sub-stations, and access roads, the water electrolysis is a growing future technology to adopt
establishment of a chemical fertilizer plant in Dhalkebar climate friendly practices and utilize resources sustain-
of Province No. 2 seems most appropriate. This shall re- ably. However, adopting a pre-matured technology for
quire a natural gas pipeline to be constructed from India to urea production at present should be a subject for deeper
Amlekhgunj (Bara district) to Dhalkebar (Dhanusha) sec- analysis and wider discussion with stakeholders. On the
tion. The pipeline distance from Amlekhgunj to Dhalkebar other hand, possibilities exist for the production of ammo-
rounds up to around 108 kilometers. This shall require nia-based fertilizers (through water electrolysis) which can
government-to-government (G2G) cooperation on the later serve as the raw material for urea production as car-
development of the infrastructure. The pre-existing con- bon capture technologies mature.
straints to establish a natural gas based chemical fertilizer
plant are: Nepal is expected to be in a state of hydro-electric sur-
plus within a few years after the completion of some mega
• The tentative cost for developing a natural gas pipeline hydropower projects. In this context, there is an ongoing
is around USD 4.75 million per kilometer and requires discussion in Nepal on maximizing the utilization of elec-
significant financial and technical resources. It needs tricity within the domestic market to reduce fossil fuel im-
to be constructed before establishing the chemical ports and minimize the trade deficit. The proposed project
fertilizer plant.
via water electrolysis will be financially sound if the exist-
ing power tariff rate is subsidized. There are a few limita-
• The location of the project site and access point for the
tions related to urea production through water electrolysis
gas pipeline to the project site should also be carefully
considered. Similarly, the route, construction, and method which are as follows:
operation of the pipeline remains a crucial factor which
needs to be scrutinized further. • Carbon capture technology is still under research
and development with recorded evidence of a mere
• A regular supply of natural gas requires GoN to sign a 5 percent CO2 capture out of the total CO2 emitted
long-term tripartite agreement with the sourcing country in case of a direct separation process, whereas in a
and connecting country (India) on a long term basis. chemical absorption process, there are claims that
more that 5 percent CO2 has been captured.

16
SUMMARY REPORT - 2021

• As electricity price substantially impacts financial from international markets, for Nepal’s case – India, and
viability, the existing rate of NPR 8.16 per Kilowatt Hour must be brought into the country through a cross-border
(kWh) is not financially feasible and needs to be revised pipeline. This can only be done through the private sector
at a subsidized rate of around NPR 3.00 per kWh. when policy infrastructure between the two countries on
the import of natural gas through a cross border pipeline
• Chemical fertilizer plants based on water electrolysis
is in place. Natural gas, in the international market, is not
technology are energy intensive and requires around
only considered a feedstock for chemical fertilizers but it
10,800 MWh of electricity per day (around 450 MW per
is also a source of energy and is considered as strategic
day) of dedicated and uninterrupted energy supply.
commodity. The price of basic energy resources is gener-
The development modality for the establishment of a ally more volatile than the price of other commodities. Two
chemical fertilizer plant would be a public private partner- aspects – a dependency on the international market for
ship (PPP) as it is directly related to the nation’s food se- the import of feedstock (natural gas) and its volatile price –
curity and the construction of the plant requires national will always pose a threat to the sustainability of a chemical
resources and decision interventions. However, determin- fertilizer plant that uses natural gas as feedstock.
ing the type of PPP contract would need further delibera-
tion in the coming days. The government might need to Chemical Fertilizers using Water as the
allocate fiscal incentives, viability gap funding, and other Primary Feedstock (Electrolysis)
incentives as needed. While the technology of using water as feedstock to pro-
duce hydrogen and subsequently ammonia is commer-
Concluding Note cially available in the international market (though at a
The following summary drawn from overall deliberation relatively higher cost to capital and production, because of
and comparative analysis made in the previous chapters electricity prices), the technology of converting ammonia
can be the basis for considering pathways to develop through a carbon capture and storage process to produce
chemical fertilizer plant in Nepal. urea is still in the development stage and is not commer-
cially available. Given the gradual increase in electric-
Chemical Fertilizers using Natural Gas as ity production within the country, electrolysis technology
could be adopted to at least produce ammonia based
the Primary Feedstock
chemical fertilizers other than urea. There is the possibil-
While the technology behind harnessing natural gas as ity of expanding such fertilizer plants to produce urea in
feedstock to produce urea is commercially available in the the future, once the technology related to carbon capture
international market and is comparatively cheaper in terms and storage is fully developed and commercially available.
of capital expenditure and cost of production, natural gas This approach, though relatively costly, will completely
is not available in Nepal. This feedstock must be arranged avoid dependency on natural gas to produce fertilizers.

17
ESTABLISHING A FERTILIZER PLANT IN NEPAL

18
ESTABLISHING A FERTILIZER PLANT IN NEPAL

GOVERNMENT OF NEPAL
INVESTMENT BOARD NEPAL
ICC Complex, New Baneshwor, Kathmandu
Phone: +977-1-4475277,4475278, Fax: +977-1-4475281
Email: [email protected]
Website: www.ibn.gov.np
20