Comments
A group of ministers (GoM) is scheduled to meet tomorrow to finalise a new investment policy for the urea sector with a view to making the nation self-sufficient in the key soil nutrient.
In 2008, the Government had announced a ‘New Investment Policy’ to boost urea production, but the scheme failed to attract fresh investment in the sector.
With the demand-supply gap for urea widening, the Government in 2010 decided to frame a new policy. Last year, the Committee of Secretaries (CoS), headed by Planning Commission member Mr Soumitra Choudhary, was set up to frame a new policy on urea.
“The GoM will examine the draft policy (prepared by CoS) tomorrow. After its approval, the matter will then be placed before the Cabinet for a final call,” sources said.
The CoS has already approved the draft new investment policy on urea prepared by the Planning Commission — the Government’s apex economic planning body.
In the draft policy, the CoS has suggested that the Government provide incentives for setting up greenfield (new plants) and brownfield (expansion of existing plants) facilities.
It prescribes using gas of up to USD 14 per million British thermal unit price for production of urea for being eligible for Government subsidy/support.
With gas being the main feedstock of urea and accounting for 80 per cent of the cost of manufacturing, the draft policy has suggested that the Government should bear the entire cost of gas till USD 14 per mmBtu.
In case gas of higher price is used, urea price will go up by USD 20 per tonne for every dollar increase in the fuel cost.
The domestic cost of production of urea (floor and ceiling price) is determined based on the cost of imported urea, which is known as import parity price (IPP).
The minimum (floor price) and maximum (ceiling price) cost of production varies for greenfield and brownfield projects. For greenfield investments, floor price is fixed at $310 a tonne, while the ceiling price is fixed at $ 340 a tonne.
Similarly, the floor and ceiling price for brownfield investments is at $290 a tonne and $ 320 a tonne respectively. However, the gas price in this case will be fully subsidised between $7.5—14 per mBtu.
Under the present investment policy, implemented in September 2008, the floor and ceiling prices of urea have been fixed at $250 and $425 per tonne, respectively.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.