Cabinet approves policy for new investments in urea sector

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New Delhi, Aug 8 (UNI) The Cabinet today approved a new policy for investments in the urea sector and long-term offtake of this fertiliser from joint venture projects abroad.

Based on the recommendation of the Abhijit Sen Committee Report, the policy aims to encourage investments in urea sector, bring about savings in subsidies, apart from increasing use of indigenously available resources of coal and making available urea at competitive prices.

Briefing newspersons on the Cabinet decision here, Minister for Science and Technology Kapil Sibal said the additional urea from the revamp of existing units will be recognised at 85 per cent of Import Parity Price(IPP) with the floor and ceiling price of 250 dollars per tonne and 425 dollars per tonne respectively.

This is intended to encourage investments in urea sector, besides efficiency of subsidy due to import substitution at prices below IPP.

The urea from the expansion of existing units, within five years of Notification, will be recognised at 90 per cent of IPP with the floor being 250 dollars per tonne.

Mr Sibal said the urea from the revived units of HFCL and FCIL, within five years of Notification, will be recognised at 95 per cent of IPP with a floor and ceiling price.

The price of urea from the greenfield projects will be derived through a bidding route with percentage discount over IPP and with an appropriate floor and ceiling price, will be worked out by the Department of Fertilisres based on prevailing gas prices.

To encourage use of indigenously available coal resources, the coal gasification based urea projects will be treated at par with a brownfield or a greenfield project as the case may be, Mr Sibal said.

According to the policy, the joint venture projects abroad will be encouraged through firm offtake contracts with pricing decided on the basis of prevailing market conditions and in mutual consultation with the joint venture company in accordance with the pricing principle recommended by the Sen Committee.

This will make available urea at competitive prices and will also lead to indirect import of energy.


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