The government in its bid to revive some defunct manufacturing units in eastern India and boost local output, has approved a policy to supply natural gas at a uniform price to all urea plants. It is expected that the saving in subsidy outgo due to revised energy norms of urea units will be Rs 6,979 crore during the next four years (2015-16 to 2018-19).
The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi approved the major policy intervention, to supply gas at uniform delivered price to all fertilizer plants on the gas grid for production of urea through a pooling mechanism. The government said the cost of urea production at pooled price would be lower than the import price, encouraging existing facilities to produce more than their capacity.
The Department of Fertilizer (DOF) has estimated that an additional urea of around 37.13 lakh metric tonne will be produced by existing units over the next four years as a result of price pooling, leading to import reduction and a saving on subsidy worth Rs 1,550 crore. Of the 300 lakh metric tonnes (LMT) urea India consumes annually, it produces about 230 LMT locally and imports the balance.
At present, there are 30 urea producing units in the country, out of which 27 units are gas based and three units viz Mangalore Chemicals & Fertilizers Limited (MCFL), Madras Fertilizers Limited (MFL) and Southern Petrochemicals Industries Limited (SPIC) are Naphtha based. CCEA also gave its approval for the revival of the closed unit of the Barauni of the Hindustan Fertilizer Corporation (HFCL) and Gorakhpur Fertilizer Unit of Fertilizers Corporation of India.