Govt allows Fertilizer industry to have joint ventures abroad

New Delhi, Feb 1 (UNI) The government will now encourge Indian urea fertilizer manufacturers to set up joint venture projects abroad where gas is readily available at reasonable prices and also plans to create a specialised agency to coordinate overseas investments in this sector.

Speaking to reporters after the Cabinet Committee on Economic Affairs (CCEA) here today, Finance Minister P Chidambaram also announced an incentive for additional production for the domestic urea producers exempting them from hitherto mandatory permission for running their units beyond 100 per cent of the installed capacity.

The CCEA has also approved new urea policy framed by a Working Group on Urea Policy set up under chairmanship of Dr Y K Alagh under which New Pricing scheme (NPS) Stage -three got the clearance and made effective from October first last year (2006).

NPS-Stage three seeks to promote the usage of natural gas, the most efficient and comparatively cheaper feedstock for production of urea.

Besides conceding to this long-standing demand of the industry, the government allowed the conversion of all non-gas based urea units to gas within three years. The Department of Fertilizer (DoF) will separately notify a scheme for conversion of fuel oil/low sulphur heavy stock based unit to gas. And in the case of non-conversion, the policy disincentivises high cost production from non-gas based units by restricting their subsidy to import parity price of urea after three years.

Responding to perpetual complaints of shortage of fertilizers in far-flung areas, the government has taken steps to strengthen the distribution system, asking the states to regulate the supplies to district levels with DoF monitoring the stock movement through website networking.

To facilitate movement of fertilizers in far-flung areas, rail freight will be reimbursed as per the actual expenditure and road freight will be escalated with respect to the composite road transport index every year.

In addtion to that, the DoF will operate a buffer stock through state institutional agencies and fertilizer companies in major consuming states upto a five per cent limit of their seasonal requirement.

UNI