Rise in Prices of Fertilizers
Ministry of Chemicals and Fertilizers ***
(Release ID :97752)
Urea is
under statutory price control and its Maximum Retail Price (MRP) is fixed by
the Government. The MRP of Urea was
fixed at Rs.5310 per tonne w.e.f. 1.4.2010. The MRP fixed is exclusive of CST, sales tax
and Central Excise Duty. The MRP was
increased marginally by Rs.50 per tonne w.e.f.
1.11.2012.
In
respect of Phosphatic & Potassic
(P&K) fertilizers, Government is implementing Nutrient Based Subsidy (NBS)
Policy w.e.f. 1.4.2010, under which a fixed amount of
subsidy, decided on annual basis, is provided on each grade of subsidised P&K fertilizer depending upon their nutrient
content. Under the Policy the fertilizer companies have been allowed to fix
MRPs of P&K fertilizers reasonably.
The highest MRP of P&K fertilizers fixed by the fertilizer companies
quarter-wise for the last three years and current year are at Annexure.
The
country is fully dependent on imports in Potassic
sector and to the extent of 90% in Phosphatic sector
in the form of either finished products or its raw material. Subsidy being
fixed, any fluctuation in international prices has effect on the production
cost and consequently the domestic prices of P&K fertilizers.
It would
be seen from Annexure that in the year 2010-11, the prices of P&K
fertilizers had increased only marginally.
In spite of increase in subsidy during the year 2011-12, the MRPs
increased due to sharp increase in the prices of P&K fertilizers and its
raw materials in international market. The depreciation of Indian Rupee further
added to the increase in MRP of these fertilizers. The unprecedented depreciation of Indian
Rupee during the year 2012-13 resulted in increase in the prices of
fertilizers. To summarize, the prices of fertilizers during the last 3 years
have increased mainly on account of fluctuation in international prices of
fertilizers, over which the Government has no control and also on account of
depreciation of Indian rupee vis a vis USD.
In order to ensure that the MRPs of
P&K fertilizers covered under NBS Scheme are fixed reasonably, it has been
made mandatory for the fertilizer companies to submit certified cost data alongwith their subsidy claims to examine and ensure that
the MRPs fixed by the companies are reasonable.
While announcing subsidy rates for 2013-14, Government has also notified
the indicative MRPs of P&K fertilizers and the amount to be reduced by the
fertilizer companies from the said indicative prices to check and ensure that
the prices are fixed reasonably.
After
implementation of Rangarajan formula on gas pricing
for domestically produced gas w.e.f. 1st
April 2014, the cost of production of Urea will increase. The cost of production of Urea increases by
about US$25 per MT with US$1/mmbtu increase in gas
price. The present wellhead price of RIL
gas is US$4.2/mmbtu, which is projected to increase
to US$ 8.4/mmbtu w.e.f.
1.4.2014. India produces 180 lakh MT of
urea domestically with gas as feedstock.
Since the MRP of urea is statutorily fixed, the increase in cost of
production will be a pass through in subsidy thereby increasing the subsidy
outgo of the Government.
As
regards P&K fertilizers, natural gas is used by a very few fertilizer
companies. The cost of production of
these fertilizers would also go up sharply, which may make domestic production
of these fertilizers economically unviable.
This
information was given by the Minister of State for Chemicals and Fertilisers, Shri Srikant Kumar Jena in a written reply in
the Lok Sabha today.
Ministry of Chemicals and Fertilizers ***
DNM/NSK/DB
(Release ID :97752)
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