To boost the Urea sector and to meet the rising demand of fertilizers, the government on Friday has approved a new Urea Policy that will attract ‘fresh investment’ in Urea Sector.
Abhijit Sen Committee has recommended this policy, which has been approved by Cabinet Committee on Economic Affairs (CCEA) on Friday.
This new policy came in the move of resuming and expanding of existing units to meet the set target of 40 million production of urea by 2012 through expanding and revamping existing units and reviving eight closed units of Fertilizer Corporation of India (FCI) and Hindustan Fertilizer Corporation (HFC) besides Greenfield projects.
At present, India is producing 21 million tonnes of urea as against the rising demand of 27-28 million tonnes, which has been filling through imports.
The CCEA has approved the recommended Import Parity Price (IPP) set with floor and ceiling price of USD 250 Per Metric Tonnes (PMT) and USD 425 PMT respectively. The government has also released a press statement in this regard.
Under the new policy, ‘the additional urea produced from the revamp of existing units would be recognised at 85 per cent of import price parity (IPP), while production from expansion of existing units will receive 90% of IPP as per fixed top and lowest price.
“The revival of closed units in public sector will get urea price equivalent to 95% of IPP, with the floor and ceiling prices mentioned above,” said CCEA in the release by adding that the pricing of Greenfield projects would be set through a bidding process which would be decided by Department of Fertilizers through granting percentage of discount over IPP, and would be calculated with appropriate floor and ceiling prices based on prevailing gas prices.
“The floor and ceiling price will be decided at the time of bidding”, the release said.
According to the new urea policy, “only non-Administrated Pricing Mechanism (APM) gas will be considered for the new investments in urea sector.” Moreover, ‘the coal gas-based urea projects will be treated at a par with brownfield or greenfield projects to encourage use of indigenously-available coal,’ added CCEA.
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