The renewable energy ministry and the department of fertilisers are likely to hold discussions on the additional supplies required, said one of the persons, who did not wish to be identified.
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The fertiliser industry, which was initially cautious about adopting green ammonia, is now willing to sign additional long-term supply contracts, a senior government official told ET.
The shift follows supply constraints and increasing import costs owing to the West Asia conflict, which have tightened availability of conventional ammonia.
India produces about 16.5-17 million tonnes of phosphatic and potassic fertilisers but remains heavily dependent on imported ammonia for domestic production.
Geopolitical tensions have disrupted global ammonia markets, leading to volatility in both prices and supplies.Also Read: Shivraj Chouhan to launch ‘Khet Bachao Abhiyan’ on June 1 as Govt reviews fertiliser, fuel stocks amid West Asia crisis
Under the National Green Hydrogen Mission, the renewable energy ministry awarded the first ever green ammonia contracts in August-September last year.
The purchase and supply agreements between fertiliser companies and producers were signed in March at fixed prices for 10 years, helping address concerns over price certainty. Buyers have since reassessed the economics as conventional ammonia prices have surged.
“The price discovered earlier is now being viewed much more favourably in the current market environment,” said one of the persons.
The development is significant given India’s annual ammonia requirement of around 20 million tonnes, driven largely by fertiliser demand.
Grey ammonia prices in India are currently trending higher than the clean or green variant, at about $900 per tonne, according to industry experts. The lowest price discovered in the auctions last year was ₹49.75 per kg, roughly translating to $550 per tonne as per current exchange rates.
Ammonia prices are determined by demand and supply. Fixing rates for a 10-year period could thus make it beneficial for buyers when prices are increasing. However, experts believe a lower differential in the price discovered can unlock the green ammonia potential in the fertiliser sector.
The global market is yet to see large-scale demand for green or clean hydrogen and its derivatives mainly due to the price difference with grey ammonia.