SEBI Reg. Investment Advisor

Download App

MoneyWorks4Me

Oil ministry moves proposal to pool prices of domestic natural gas for fertilizer plants

19 Feb 2015 Evaluate

The Oil Ministry has moved a proposal to pool or average out prices of domestic natural gas and imported LNG used by fertilizer plants, to make the cost of fuel uniform and affordable. The proposal moved for inter-ministerial consultations, before being put up to the Cabinet Committee on Economic Affairs (CCEA), calls for averaging of different rates of domestic and imported gas to ensure supply of fuel to all urea plants at a uniform delivery cost.

Fertilizer plants consume about 42.25 million standard cubic meters per day of gas for manufacture of subsidised urea. Out of this, 26.50 mmscmd comes from domestic fields and the rest 15.75 mmscmd is imported liquefied natural gas (LNG). The cost of gas varies from plant to plant owing to differential rates at which imported LNG is contracted as well as cost of transportation.

It has been reported that the ministry has proposed waiver of customs duty on import of LNG for fertilizer units and natural gas being covered under 'Declared Goods' thereby drawing levy of 4 per cent central sales tax and not differential rates of state sales tax or VAT. The ministry has proposed to make state-owned gas utility GAIL India as the pool operator. The Department of Fertilizer will determine the total requirement of natural gas and draw plant-wide requirement, which would then be informed to the pool operator, GAIL. The pool operator will tie-up imports after considering domestic availability and after averaging out price of both, delivery the fuel at uniform rate to all plants.

The ministry wants the pooling mechanism to be effective from April 1. Pooling of gas would help in focusing on improving plant efficiency and may help in price advantage in sourcing of LNG. The government is already considering a proposal to pool gas prices for power plants.

About MoneyWorks4Me

MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.

Our Vision

To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.

What Makes MoneyWorks4Me Different

Our Approach: Ensuring compounding work its magic on client portfolio.

MoneyWorks4Me ensures this through: