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Nutrient-based subsidy likely for urea soon

29 Mar 2011 Evaluate

A key committee of secretaries has agreed 'in principle' to bring urea under the nutrient based subsidy regime, or NBS, allowing for a hike up to 10% in the farm gate price of urea in the first year. The CoS has also 'tentatively' agreed to provide a flat subsidy of Rs 4000/tonne to all gas-based plants.

The discussions indicated additional subsidy is likely to be provided, under the model being debated, to the less cost-efficient non-gas (naphtha, fuel oil, LSHS) based urea units for a period of two years. These units are scheduled to switch to gas for feedstock is 2012-13. 

They will continue to follow the current pricing model till they switch to gas as feedstock. The model being discussed suggests that natural gas will be pooled at Fertiliser Industry Co-ordination Committee level for calculating the weighted average price. This will make landed cost of gas same to all units and will take care of differences that currently arise from buying gas from various sources at different prices and gas transportation charges. crackcrack

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