New urea investement policy likely this week
The Cabinet Committee on Economic Affairs is likely to discuss this week an investment policy for urea sector that promises higher remunerative prices.
By PTI |
NEW DELHI: The Cabinet Committee on Economic Affairs is likely to discuss this week an investment policy for urea sector that promises higher remunerative prices with a view to increase the production by 10-15 per cent in short term.
"The Fertiliser Ministry's proposal was to come up at the CCEA meeting last week but couldn't be taken up. It is slated to come up for approval this week," a Fertiliser Ministry official said.
Under the proposal, it has recommended international price -parity for the domestic urea manufacturers. However, a maximum cap price of USD 425 per ton will be taken into consideration for payment of subsidy by the government. This is better than present consideration of USD 350 per ton.
"There is no investment in the fertiliser sector for the last 15-20 years. The production capacity has not increased but the output fell because of closure of some plants. So there was a need for a policy to attract high investment in fertiliser sector," the official said.
The policy would provide incentive to efficient producers and would be applicable only for additional production and not existing one, he explained. Urea production capacity is targeted to almost double to 40 million tons by 2012.
The current installed urea capacity is 21.04 million tons while the demand has surged to 27-28 million tons. The gap is met through imports from overseas markets where prices have gone up substantially leading to three-fold rise in subsidy.
The Ministry has proposed 85-95 per cent parity with global prices to the domestic producers of urea while simultaneously putting a price band of 250-425 dollars per tonne, he said.
"The Fertiliser Ministry's proposal was to come up at the CCEA meeting last week but couldn't be taken up. It is slated to come up for approval this week," a Fertiliser Ministry official said.
Under the proposal, it has recommended international price -parity for the domestic urea manufacturers. However, a maximum cap price of USD 425 per ton will be taken into consideration for payment of subsidy by the government. This is better than present consideration of USD 350 per ton.
"There is no investment in the fertiliser sector for the last 15-20 years. The production capacity has not increased but the output fell because of closure of some plants. So there was a need for a policy to attract high investment in fertiliser sector," the official said.
The policy would provide incentive to efficient producers and would be applicable only for additional production and not existing one, he explained. Urea production capacity is targeted to almost double to 40 million tons by 2012.
The current installed urea capacity is 21.04 million tons while the demand has surged to 27-28 million tons. The gap is met through imports from overseas markets where prices have gone up substantially leading to three-fold rise in subsidy.
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The Ministry has proposed 85-95 per cent parity with global prices to the domestic producers of urea while simultaneously putting a price band of 250-425 dollars per tonne, he said.
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