Updated: October 8, 2014 18:41 IST
Govt. notifies new Urea Investment Policy
The Hindu
A file picture shows Urea bage being unloader from railway wagons and
loader into lorries at Dindigul, Tamil Nadu. Photo: G. Karthikeyan.
In order to increase domestic urea production, the Fertilizer Ministry
has notified New Urea Investment Policy for setting up and expansion of
urea plants.
According to the policy, interested private companies are required to
give a bank guarantee of Rs 300 crore for every project, while PSUs
firms have been exempted from it.
The companies will get a subsidy on production only if the urea
production starts in the next 5 years. The subsidy will continue till 8
years after the commencement of production.
In February, the government approved the amendments in the policy after
as many as 13 players including IFFCO, RCF and Tata Chemicals proposed
setting up of urea plants entailing capacity addition of 16 million
tonne, whereas the shortfall between demand and production of urea is
around 8 million tonne which is met through imports.
Sources said the proposed capacity addition by the applicants was more
than the actual requirement as earlier policy was assuring the
‘guaranteed buyback’
Following this, the ministry proposed for dropping the guaranteed
buyback clause and replacing it with the Rs 300 crore bank guarantees so
that only interested players approach for setting up of new urea
projects.
According to the sources, as per policy the flexible lower limit and
ceiling limit of urea cost has been fixed after factoring the gas price
from $ 6.5 mmbtu to $ 14 mmbtu.
These provisions were made in the policy before the government decided to raise the gas prices from April 1, 2014.
The decisions on various issues during the implementation of this policy
will be taken by a Committee of Secretaries including from Expenditure,
Petroleum, Planning Commission and Agriculture. Fertilizers Secretary
will be Chairman of the committee.
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